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MoJ: 1 in 4 claims management companies breaking the law
Wednesday 4th November 2009
Debt Management Today
It has been revealed by the Ministry of Justice that around a quarter of claims management companies are breaching its rules about treating customers fairly and transparently.
The regulator told the Daily Mail newspaper that out of 3,000 registered companies in the claims management sector, roughly 750 have broken the law by using misleading statistics about how many claims are successful; or by failing to inform customers that they could pursue the claim themselves, instead of paying the company an upfront fee to do it.
Hundreds of firms have already been banned by the Ministry of Justice for breaching these regulations.
The majority of claims handlers charge an upfront fee to examine a consumer’s credit file, which can typically range from £150 to £350. If the claim is successful most companies will take 30% of any money that is paid back.
However, consumer advice groups have warned people to steer clear of the controversial sector, and opt for free debt advice from organisations such as Citizens Advice Bureau (CAB).
Recent research by Which? showed that consumers could actually be better off making a claim themselves rather than using the services of a claims handler.
Martyn Hocking, editor of Which? magazine, has said: “Claims management companies have some very crafty ways to encourage you to use them, from exaggerating their success rates to suggesting they’d be more successful at getting your money back than if you did it yourself. Not only are the firms breaking rules in some of these cases, but making a claim for mis-sold PPI or bank charges is a simple process, and you can do it yourself.”
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Wednesday 4th November 2009
Debt Management Today
It has been revealed by the Ministry of Justice that around a quarter of claims management companies are breaching its rules about treating customers fairly and transparently.
The regulator told the Daily Mail newspaper that out of 3,000 registered companies in the claims management sector, roughly 750 have broken the law by using misleading statistics about how many claims are successful; or by failing to inform customers that they could pursue the claim themselves, instead of paying the company an upfront fee to do it.
Hundreds of firms have already been banned by the Ministry of Justice for breaching these regulations.
The majority of claims handlers charge an upfront fee to examine a consumer’s credit file, which can typically range from £150 to £350. If the claim is successful most companies will take 30% of any money that is paid back.
However, consumer advice groups have warned people to steer clear of the controversial sector, and opt for free debt advice from organisations such as Citizens Advice Bureau (CAB).
Recent research by Which? showed that consumers could actually be better off making a claim themselves rather than using the services of a claims handler.
Martyn Hocking, editor of Which? magazine, has said: “Claims management companies have some very crafty ways to encourage you to use them, from exaggerating their success rates to suggesting they’d be more successful at getting your money back than if you did it yourself. Not only are the firms breaking rules in some of these cases, but making a claim for mis-sold PPI or bank charges is a simple process, and you can do it yourself.”
Share this article:
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