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Don't believe these claims of winning back bank charges
Cold calls from CMS raise questions about industry regulation
It's an alluring phone message, even if it does come out of the blue.
When the unsolicited caller says he can get you out of bank overdraft charges and penalties at no cost, most people sit up and listen. And the pitch becomes even more attractive when you're told it will cost nothing.
But one of these random calls to a Cash reader came from a claims management firm whose owners are banned from being company directors. It raises questions over the Ministry of Justice (MoJ) regulation of companies promising to help consumers reclaim bank and other financial charges.
This reader, and others, was phoned by Credit Management Systems (CMS), a Swansea-based firm which "provides a range of professional claims services for people and businesses that believe they have been treated unfairly by their bank/credit card company/lender". Its website claims "we use our insight into the mechanics of the claims system to simplify the complexities of the process and guide people through the maze of regulatory procedures towards a successful result".
Despite this "insight", it is hard to see what can be done due to the freeze on claims against banks for repayment of overdraft fees and penalties while the Office of Fair Trading case on these charges winds its way through the courts. As long as the legal issues remain unresolved and the Financial Services Authority "waiver" stays, no compensation will be paid. Also, if the banks win, there will be no refunds.
CMS tells potential customers the service is free. But CMS employees ask for debit/credit card details which no one should give to an unknown firm. The CMS website says there is a one-off £49.99 charge.
CMS is part of the booming claims management business, so must be regulated by the MoJ. But searching the MoJ register for CMS proves fruitless.
And that's because CMS is not a legally constituted company. Instead, it is a partnership between Martin Andrew Badham, 47, of Burry Port, Dyfed, and Paul Thompson, 39, of Port Talbot, West Glamorgan. Both are shown as regulated under authorisation CRM5161. But that authorisation gives no clue of their background.
In 2004, Radio 4's File on Four found CMS Investigations, a company directed by Badham and Thompson, cold-called council tenants in south Wales advising they could get damp conditions repaired, plus compensation - at no cost - from their local authority. But tenants had to take out insurance at £519 (paid via a bank loan) in case the action was lost. When one couple won, they found themselves even deeper in debt than before. Nine others had a similar experience, thanks in part to lawyers charging £165 an hour for work which should have been legally aided.
CMS Investigations was put into compulsory liquidation by the Official Receiver in 2007. Badham and Thompson, who had previous directorships in dissolved or liquidated companies in mobile phones and insurance as well as claims, were banned from being the director of any company for three years. This does not preclude them from setting up firms as partners.
The 2004 case prompted government to set up claims management regulation. But MoJ figures show that of some 3,000 businesses set up, only three were cancelled over "serious issues" and a mere seven applications were refused.
Don't believe these claims of winning back bank charges
Cold calls from CMS raise questions about industry regulation
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- Tony Levene
- The Observer, Sunday 22 February 2009
- Article history
It's an alluring phone message, even if it does come out of the blue.
When the unsolicited caller says he can get you out of bank overdraft charges and penalties at no cost, most people sit up and listen. And the pitch becomes even more attractive when you're told it will cost nothing.
But one of these random calls to a Cash reader came from a claims management firm whose owners are banned from being company directors. It raises questions over the Ministry of Justice (MoJ) regulation of companies promising to help consumers reclaim bank and other financial charges.
This reader, and others, was phoned by Credit Management Systems (CMS), a Swansea-based firm which "provides a range of professional claims services for people and businesses that believe they have been treated unfairly by their bank/credit card company/lender". Its website claims "we use our insight into the mechanics of the claims system to simplify the complexities of the process and guide people through the maze of regulatory procedures towards a successful result".
Despite this "insight", it is hard to see what can be done due to the freeze on claims against banks for repayment of overdraft fees and penalties while the Office of Fair Trading case on these charges winds its way through the courts. As long as the legal issues remain unresolved and the Financial Services Authority "waiver" stays, no compensation will be paid. Also, if the banks win, there will be no refunds.
CMS tells potential customers the service is free. But CMS employees ask for debit/credit card details which no one should give to an unknown firm. The CMS website says there is a one-off £49.99 charge.
CMS is part of the booming claims management business, so must be regulated by the MoJ. But searching the MoJ register for CMS proves fruitless.
And that's because CMS is not a legally constituted company. Instead, it is a partnership between Martin Andrew Badham, 47, of Burry Port, Dyfed, and Paul Thompson, 39, of Port Talbot, West Glamorgan. Both are shown as regulated under authorisation CRM5161. But that authorisation gives no clue of their background.
In 2004, Radio 4's File on Four found CMS Investigations, a company directed by Badham and Thompson, cold-called council tenants in south Wales advising they could get damp conditions repaired, plus compensation - at no cost - from their local authority. But tenants had to take out insurance at £519 (paid via a bank loan) in case the action was lost. When one couple won, they found themselves even deeper in debt than before. Nine others had a similar experience, thanks in part to lawyers charging £165 an hour for work which should have been legally aided.
CMS Investigations was put into compulsory liquidation by the Official Receiver in 2007. Badham and Thompson, who had previous directorships in dissolved or liquidated companies in mobile phones and insurance as well as claims, were banned from being the director of any company for three years. This does not preclude them from setting up firms as partners.
The 2004 case prompted government to set up claims management regulation. But MoJ figures show that of some 3,000 businesses set up, only three were cancelled over "serious issues" and a mere seven applications were refused.
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