Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

[AdvS1]

Hello Legal Beagle members,

I wanted to ask for some advice before a situation becomes legally escalated.

I’m a sole trader and as a side-line to my main services, last year I did some referral work for a claims management company. In this forum I’ll call them Withholding Company Limited.

Withholding Company Limited are registered with the Ministry of Justice aka MOJ - the claims management industry authorising regulators.
They are registered there to provide financial products/services by challenging the banks and other lenders on behalf of their clients to help them claim back debts owed on their credit cards, store cards, loans etc.

I sent invoices to Withholding Company Limited dated between July 2008 to October 2008 and from those invoices, I'd be paid my referral fee or commissions.

As I was an Introducer, I requested an update on my referral work status with them. They had previously paid me with no hesitation for referrals that were put through for them to service.

They revealed that a further 4 accounts had signed up through my website for claims management services and that commissions from them would be paid to me.

I have proof of previous payments via my bank account statements and each client account is worth £100.00 commission paid as an upfront referral fee.
Even more can be paid as a back-end fee, once a challenged claim is settled in or out of court, so there is potential for a further £3,500.00 to also be paid.

From their reply, I sent them invoices requesting commission fee payments for those accounts. I have proof of their acknowledging receipt of my invoices, by email, and that they would be passed to their accounts department to be paid.

Even when I had asked for an update on my account, they didn’t even know who I was as it was only then, they asked me for my contact details etc.

In December 2008 when I chased up the invoice payments, they decided to withhold my commission payments unless I signed a form that was to be sent to the MOJ.

Previously, I had never signed any forms or documents from Withholding Company Limited as based on mutual good faith, they accepted all clients that signed up through my website and paid me for those introductions.

Once they saw that I was requesting further payment for work carried out, they then started saying that a form needed to be signed that was to be sent to the MOJ and that I would be paid upon doing this. I reluctantly complied and did this in the hope of being paid. They received this form via post and confirmed receipt of it.

They then moved the goalposts again by stating that their form to be sent to the MOJ and an ‘agreement for the provision of claims referral services‘ would need to be signed and sent to them before they could release payment.

I challenged them on this and they stated that they didn’t say that they wouldn’t pay me, but that they would only pay me once I signed the forms and sent it to them. Again, I have this as proof in an email from them.

My reluctance to sign their referral agreement is because I don’t agree with some of their terms and conditions. Also from their history, knowledge of their business and current behaviour towards me, they operate using underhanded, negative and manipulative business practices.

In February 2009, I sent them a recorded delivery debt reminder letter for the outstanding invoices and they sent it back to me with their own reply letter!

Despite previous requests for payment that even included acquiring the services of a debt collection agency, I am still awaiting payment.

Basically, they are trying to force me to sign this referral agreement and then they say they will ‘release funds to me.’

I am considering writing a “Letter Before Action” to Withholding Company Limited, giving them 7 days notice before proceeding with court action.

Just in case the situation does end up in a small claims court, can anyone offer me any advice about this scenario including the details/total owed i.e. should it be £400.00 adding on interest, late payment charges and any other costs and/or should I also include in the figure of £3,500.00 to be stated on an N1 claim form?


I look forward to your reply.


Kind regards.

AdvS1

[Amethyst]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

In November 2008 there was a clamp down on introducers and referrals.

The guidance issued by the MOJ clarified some previously wishy washy areas and companies were warned to stop practises which went against the rules.

Which introducers/referrers are exempt?
There are many businesses that refer a small number of cases either to solicitors or claims
management businesses. It would be disproportionate for such businesses to be required to
be individually authorised. However, it is important that all businesses comply with the
Conduct Rules. To deal with this situation, the “exempt introducer” status has been
introduced. The requirements are set out in detail in the Compensation (Exemptions) Order
2007 but, in practice, applies as follows –
A business may refer claims and will not be required to seek authorisation where;
- they provide no other regulated claims management activity, including
advertising or seeking out persons who may have a cause for a claim, or advising
on a potential claim; and

- acquiring the case for referral is incidental

1 to the introducer’s main business;

and

- the referral is

only made to an authorised business or legal practitioner; and

- the business is paid for no more than 25 referrals per calendar quarter.

The business must meet each one of the above criteria to be deemed an exempt

introducer. Additionally, the authorised business or legal practitioner receiving these

referrals must take steps to ensure that the introducer has obtained the referrals in

accordance with the Conduct of Authorised Persons Rules 2007.
It is important to note that

all of these tests must be met. Examples where all the tests

are not met include –

(a) A person running a post office refers personal injury cases to a solicitor

(referring personal injury cases is not incidental to running a post office; a

separate claims management business is being run).

(b) A person advertises for personal injury business and passes under 25 cases
a quarter on to solicitors (advertising is a regulated claims management
service and so referring cases is not the only service provided).
(c) A person refers 50 cases a quarter to solicitors but no more than 25 to any
one practice (the limit is on the

total number of referrals not the number

passed to any one solicitor or authorised business).

Where cases are introduced to authorised businesses, then under the Conduct Rules the

authorised business must satisfy itself that the introducer is entitled to be exempt and must

ensure that the introducer complies with the rules on advertising, marketing and soliciting

1

‘Incidental’ means that the claim must arise as a result or consequence of the business being carried

out by the introducer, not a separate feature of the business – see examples below.

7

business. Where cases are introduced to a solicitor then the rules set out by the Solicitors

Regulation Authority apply.

The exemption is intended for small scale introducers. If a business finds the volume test a
constraint then it should seek authorisation. It may well be the case that some solicitors and
claims management businesses will require their introducers to be authorised in their own
right anyway.
Introducers acting as agents for a business
Where introducers are in effect agents of the business, then if there is a proper agency
contract they are covered by the business’s authorisation. For example, where a claims
management business employs agents to market the business in obtaining work or
representing the business in dealing with clients, then the agents will not require
authorisation. In doing so, the agent would use the authorised business’s name, branding
etc. in their dealings and the client would be contracting with the authorised business.
Purchasing advertising space, for example, in a shop, does not necessarily mean that the
shop has to obtain authorisation, because the advertisement should say who the consumer
should contact. If the shop gathers the claim information and refers the details on, the owner

will need to check if they fall under the exemptions or need to be authorised.

The timescale you are talking about, ie being paid fine to October 2008 before the goalposts moved, seem to scan with that.

Basically we would need to know if you and the company were complying with the regulations before and after that guidance was issued.

How many referrals about were you putting their way ?

Once they saw that I was requesting further payment for work carried out, they then started saying that a form needed to be signed that was to be sent to the MOJ and that I would be paid upon doing this. I reluctantly complied and did this in the hope of being paid. They received this form via post and confirmed receipt of it.

What form was this and do you have a copy?

Do you have a copy of your contract/agreement from when you began working with them that we can see. Also a copy of the updated/new contract/agreement they are using to withold payment.

How are you informed as to the status of claims you pass to them ? Do you know which ones have reached a successful conclusion etc ?

They then moved the goalposts again by stating that their form to be sent to the MOJ and an ‘agreement for the provision of claims referral services‘ would need to be signed and sent to them before they could release payment.

May explain why they think they can withold payment (ie preempt what they may use as a defence if you issue a claim against them)

[AdvS1]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Hello Amethyst,

Thank you so much for your reply and I apologise again for the delay in replying.
I will answer each point as I come to it.
Please feel free to ask further questions if I haven't asnwered any as fully as possible :tinysmile_hmm_t2:

Basically we would need to know if you and the company were complying with the regulations before and after that guidance was issued.

I'm afraid I wasn't aware of their full office practices.

At the time of referrals I was known as an "Exempt Introducer" which meant that I was able to refer up to 25 accounts for claims management services before needing my own MOJ authorisation number.
I was within the limits and guidelines to act as an Standard Introducer to the company.

Since 23rd December 2008, I was authorised by the MOJ to provide claims management services in my own right as I'd applied for my own Claims Management authorisation number. It is still valid today and will run until the first quarter of 2010.

How many referrals about were you putting their way ?

From my knowledge, seven accounts were paid for by four clients which meant that I was due £700.00 in front-end commissions. They had already paid me £300.00 by BACS and upon requesting an account update, I invoiced them for a further £400.00 .

What form was this and do you have a copy?

It is an MOJ questionnaire form.
I do have a copy although I don't have a scanner.
I can fax it to you for you to see if you can provide a fax number?

Do you have a copy of your contract/agreement from when you began working with them that we can see. Also a copy of the updated/new contract/agreement they are using to withold payment.

Yes, I will have to look for the original agreement.
Again, when I find it I can fax it through to you.
I can also email the updated contract later (unfortunately it is not on this computer).

How are you informed as to the status of claims you pass to them ? Do you know which ones have reached a successful conclusion etc ?

I have an email and hard copy version of all the referrals that came through my website as leads. It gives an update of each status.
From this I raised two invoices in early December 2008 with the clients names as a cross-reference. Again this can be forwarded to you.

That's a good question. I don't know which ones have reached a settlement stage yet, only that the clients paid their fees in the beginning to have the claims service provided for them.

It was stated/estimated by the company that the claims could be settled in or out of court within a 6-12 months timeframe. So from that, some or all of them could be settled by now, hence looking to claim for the back end fees.

I doubt very much that the company might reveal this if I requested it, as they know that I will also demand this related back-end fee too.

I will certainly come back with the information/evidence required either later this evening or tomorrow.

I hope the answers provided are applicable?

Connect again soon and thank you Amethyst.

Very kind regards,
AdvS1.

[WendyB]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Just a quick question - where does the figure of 3500 come from? How is it calculated? or have I missed it?

[Amethyst]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Thanks hun look forward to seeing the docs xx

wends - the £3500 is the back end commission payment. Introducers often get a front end fee (when they pass on the claim to the claims company initially - usually a fixed amount eg £100) and a back end fee (when the claimants claims is completed and is usually a % of the claim/success fee).

[WendyB]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Thanks hun look forward to seeing the docs xx

wends - the £3500 is the back end commission payment. Introducers often get a front end fee (when they pass on the claim to the claims company initially - usually a fixed amount eg £100) and a back end fee (when the claimants claims is completed and is usually a % of the claim/success fee).

Yes I get that bit, but just couldn't see how it was arrived at, if we don't know what claims were successful and for how much, then how was it arrived at? The original post only says "there is potential for a further 3500 to be paid"

Or am I just being thick? Or fussy?

[AdvS1]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Hi there Amethyst,

Thanks for your input.


Hi Wendy,

Thanks for your input too.
No, I don't think you're being thick or fussy at all.

Amethyst is right.
The amounts stated are part of the 'Introducer Reward Framework' and is a quoted figure there.
The supporting docs are on their way shortly and should explain further.

I'll be emailing/faxing them.


Regards,
AdvS1 x

[AdvS1]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Hi Guys,

How is everyone?

After sending through my details I just wondered if there are any updates with my claim request?


Kind regards,

AdvS1.

[LuggerBugs]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Personally speaking, anyone who acts as an introducer needs to be as careful as the CMC's potential clients do. Not all (I'd say none, but that's just me) CMC's are very nice to deal with from a consumer perspective, so I don't see why it should be any different from your point of view either.

Again, IMVHO of course, you need to take the rough with the smooth. So having taken a decision to try to make some easy money, a decision which on the face of it has come back to bite you on the bum and so seems somewhat like poetic justice to me.

Sorry for the rant. Well, I'm not, but courtesy dictates that I try at least to give that impression.

[Amethyst]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

hi hun

Sorry been rushed off, we have the docs you sent through and when I get an hour to go through them all with Tools will post on here.

xxx

[AdvS1]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Hello LuggerBugs,

Just as further background to my request, my association with this CMC has nothing to do with ‘easy money’, as you put it.

I’ve have never gone into any business or provided services whereby there was the chance to get rich quick or other such schemes. That route of doing business does not interest me at all.

With this company, I was there at the inception to the updating of the business via it’s website and back-office technology development and so had an ongoing, very good relationship with some of the Management team.

This website technology development was continual for at least two months before I received my own website to promote, which built the business and so helped with their sales and marketing.

My introducer role was to help those that were interested in more information about the CMC’s provided services. These prospects became clients that genuinely seeked help with their debts and afforded the payments to do so, hence the commission payments.

No “poetic justice“ or ‘biting of the bum” was ever previously envisaged and as I said in my initial posting, I was previously paid for initial referrals, one of which was from the same client who put through numerous accounts to be audited.

As careful as I was with my dealings, there are always opportunities for people to pose delaying tactics and/or renege on paying what is due to others.

Hence my coming on this forum for expertise and supported guidance in my request for help. If you are open to playing a role in that, then constructive feedback from you is most welcome.

If you like, I can pm you the name of the company and it’s directors so that you can post your rants directly to them.

　
Thank you and Regards,
AdvS1.
------------------------------- merged -------------------------------
Hi Amethyst,

Thanks for your reply.

I appreciate that you are very busy and that mine is not the only post wanting your attention.

Please come back when convenient.

Take care,
AdvS1 xxx

[LuggerBugs]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Hey, you can't please everybody. And in my own personal opinion, I consider all claims management companies to be one step up from the bottom dwellers of the debt purchase industry, along with those who feed from the same trough.

I wouldn't half mind the info you have kindly offered, ta very much. Ranting at the directors of these companies is a bit of a hobby of mine.

[Tools]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

How much money is now owing to you at present that you can prove outright. i.e what you have already invoiced them for, is that the £400?

How much is possibly due to you as potential back end fees, that at present without them updating you, you can only assume this is due to you, is that the £3500?

If so then you could play this one of two ways, you could simply issue a demand for the provable £400, or, you could issue a demand for the £400 plus the £3500 and let them dispute part/the whole of the £3900.

We have had a look at the info you sent, on the faxed documents you sent me there appears to be the right hand side of the table with "Date" / "Referral Name" / ??????? missing. Was the right side of that table where the referral fee amount should be?

Whichever way you want to take it, it should simply be a matter for the small claims court. You just have to be sure that you can back up any amounts claimed in court with documented evidence and that "Witholding Company" cannot dispute your claim.

The letter before action would simply be your notice of intent to commence legal action to recover monies owed for xxxxxxxxxxxxxx ( describe exactly why you are owed the money)

Include 8% statutory interest from the day each amount was due. You cannot reasonably ask for late payment charges ( dont forget you have no legitimate contractual provision for them , think of credit card late charges, what do we do with them )

You should give them 14 days to pay you what is owed or dispute the amount before you issue a small claim.

[AdvS1]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Hi Tools,

Thank you so much for your reply.
I just want to answer in turn:

How much money is now owing to you at present that you can prove outright. i.e what you have already invoiced them for, is that the £400?

Yes, that's right. The £400.00

How much is possibly due to you as potential back end fees, that at present without them updating you, you can only assume this is due to you, is that the £3500?

Yes, £3,500.00

We have had a look at the info you sent, on the faxed documents you sent me there appears to be the right hand side of the table with "Date" / "Referral Name" / ??????? missing. Was the right side of that table where the referral fee amount should be?

I've had a look again at the information I sent, either I've gone funny or I can't see that information. Is there any way to 'partial post' it here as a reminder?

The letter before action would simply be your notice of intent to commence legal action to recover monies owed for xxxxxxxxxxxxxx ( describe exactly why you are owed the money)

Before I saw Amethysts's reply to my posting on the 18th July, I had already written an LBA with two invoices attached for payment. I received their reply. I knew that they would dispute it but wanted to give them one last chance.

Please see details faxed.

Include 8% statutory interest from the day each amount was due. You cannot reasonably ask for late payment charges ( dont forget you have no legitimate contractual provision for them , think of credit card late charges, what do we do with them )
I have seen a website called 'payontime.co.uk' . Can I use the Statutory Interest Calculator section to get the interest rate? See here>> http://payontime.co.uk/calculator/statutory.html


You should give them 14 days to pay you what is owed or dispute the amount before you issue a small claim.
Tools, I'd like to post up a draft version of the n1 form and particularly the POC part before I bring it to the court.

Could you or Amethyst give it a "quick guidance" check before I post it?

Thank you so very much for the help already given

Kind regards,
AdvS1.

[Tools]

Re: Claiming Against a Consumer Credit Act Claims Management Company - Advice Needed

Ok we have the info thank you Ame and myself are looking at this together even if only one of us posts a reply.

Forget what I was saying about the other faxes with the missing column, what you have faxed today is ample to prove the £400.

A couple questions if we may:-

• Did you have any written agreement with "witholding company" regarding referring leads and payment for that service, if not on what basis were you paid previously to this?
• If not, and correct me if I am wrong, are referrers exempt from needing agreements (not MOJ authorisation) with cmcs if they refer less than 25 leads in total during any calendar quarter.
• Were you referring 25 or more leads in total to this and any other company during a quarter.