Some claims management companies are discouraging consumers from claiming back excessive bank charges or mis-sold payment protection insurance (PPI) by themselves, according to an undercover investigation carried out by consumer magazine Which?.
In August 2009, Which? made 68 calls to claims management companies posing as potential customers. 38 of the calls were about PPI and 30 were about bank charges.
Researchers who posed as customers interested in making a claim found that almost a third of firms didn’t meet Which? benchmarks.
To pass the Which? benchmark, companies had to tell the Which? undercover researcher that they could pursue the claim themselves and not suggest that they would have a more favourable outcome if they opted to use the claims management companies. They also had to be clear and honest about success rates, how they charged fees and who the company was regulated by.
Only 10 out of 38 companies asked about mis-sold PPI passed the Which? test. 12 of those that failed implied the researchers would be better off using their company rather than claiming independently, even though an independent claim costs nothing. This breaks rules set by the Ministry of Justice (MOJ). The rules state that where a claim is one that falls within the province of the Criminal Injuries Compensation Authority, the Financial Ombudsman Service, the Housing Ombudsman Service or any other recognised dispute resolution procedure, the business must not suggest that a claimant will have a more favourable outcome if he uses the services of the business.
Which? used a combination of the Ministry of Justice rules and its own standards to check whether firms were acting fairly and reasonably, ensuring that information wasn’t misleading and advising clients of the ombudsman scheme.
A further 16 firms professed to have successfully claimed back money in 90% or more of cases without properly qualifying this, while five companies couldn’t say how they were regulated.
Advice about excessive bank charges claims was better, though some firms discouraged researchers from claiming themselves. Comments included: “You can make the claim yourself but you will have to wait till maybe next year… [we can do it] straight away””. One company didn’t mention the ongoing bank charges court case.