Claims management companies should be banned from charging upfront fees, Citizens Advice demanded this week.
The charity accused predatory claims firms of using dodgy tactics to take £2bn from the pockets of people who have been mis-sold payment protection insurance.
Citizens Advice's chief executive Gillian Guy said: "Claims management companies are preying on people who have already lost out thanks to the banks' mis-selling."
She said the firms are a hindrance, not a help. "We see people who end up worse off because, despite having a successful PPI claim, the compensation goes to pay off their debts and they are saddled with a large fee.
"Plus many people are paying upfront fees yet never get a penny of a payout." The charity's research shows that the average upfront fee is £600, while one Citizens Advice bureau saw someone who had been charged an extortionate £3,300 in upfront fees.
Two-thirds of claims managers don't tell people how much they will charge for their services while four out of five do not give any information about their cancellation rights.
It's currently estimated that the total bill for mis-sold PPI will cost the banks more than £12bn, but anyone using a claims chaser to process their application may lose out.
"You can make a claim for mis-sold PPI for free yourself," said Ms Guy. "We have template letters and online advice about how to make a claim at adviceguide.org.uk."
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