Bradford & Bingley is facing an angry backlash after announcing that it will no longer deal with companies handling complaints on behalf of customers with endowment-linked mortgages. The lender said it did not believe such firms were acting in borrowers' best interests, but claims-handling experts accused it of acting illegally.
More than 20 companies now offer to handle claims by borrowers who believe they were mis-sold an endowment-linked mortgage. In return, they take a slice of any compensation won; commissions vary, but can be as much as 50 per cent.
B&B said it believed many customers did not know they were entitled to complain themselves, and to take their cases to the Financial Ombudsman Service, which is free and impartial. "Customers are no more likely to have a complaint upheld when using a claims management company than when pursuing it themselves," a B&B spokeswoman said.
"They are agreeing to sign away between 10 and 50 per cent of compensation awarded, but if they win a claim via the free service or the Ombudsman, they keep 100 per cent."
Tim Moore, the founder of EndowmentClaims.com, one of the firms now barred by B&B, said: "Do people really think that B&B is doing this in the interests of its customers? It is doing it because it wants to get out of paying proper compensation."
Moore said many of his clients had won much larger compensation pay-outs from endowment providers than they had originally been offered when acting alone. "People don't know how the system works and many companies are not sticking to the rules," he said.
Jo Welleck, the managing director of Seeing Red, another claims handling specialist, said: "We make it clear to clients that they can do this on their own, but in most cases they tell us they haven't got time or that they don't know where to start."
Seeing Red pointed out that anyone making a complaint about a financial services company has a legal right to appoint an agent of their choice to represent them. B&B conceded that it would deal with claims-handling firms if customers insisted they wanted their case managed this way.
A spokesman for the Financial Services Authority said it did not believe B&B's decision broke any of its rules.Reuse content