90% pestered by claims firms
A survey carried out by Citizen’s Advice (CA) revealed that three in five have been pestered within one week. CA is calling for a ban on this cold calling, 72% of which is related to Payment Protection Insurance (PPI), with claims management firms harassing people in their homes in order to get a £2bn cut of PPI compensation.
People who have been missold PPI can make a claim directly against the provider, and have no reason to use these claims management firms, which take a proportion (typically 25%) of any payout.
Data from Citizens Advice Bureaux across the country found people were spending, on average, over £1,100 in fees for something they can do themselves for free. One CAB saw a client who paid over £4,000 in charges.
Some claims management firms are charging upfront costs of £600, without being clear if the consumer will get any sort of payout. In the last seven months, the Citizens Advice consumer service handled over 4,800 queries about claims management companies offering PPI compensation services.
Bureaux dealt with 43% more problems concerning PPI in the last twelve months, 3,200 of these problems concerned claims management companies.
CAB advisers uncovered a worrying array of problems experienced by clients:
- One in six had unauthorised fees taken from their bank account
- Thirteen per cent had paid high fees despite not getting any sort of payout
- Two in three had been mislead and experienced high pressure selling tactics – despite this being outlawed by the Conduct of Authorised Persons Rules
- One in three had been charged excessive fees compared to the compensation they got
- Twenty eight per cent said the fees were unexpectedly high based on the information they had received
- The average compensation gained was just over £3.100.
Citizens Advice chief executive Gillian Guy said:
“People should give cold callers the cold shoulder and go direct to their bank if they want to make a claim for PPI. We’re advising them to ignore any unsolicited calls, texts, letters or emails from claims management companies.
“These firms are intimidating people in their home and wasting a lot of people’s time – and in some cases money when they make a claim and nothing comes of it. They’re not up front with their customers about fees, are charging excessive costs and aren’t getting people the payout they deserve.
“Banks can stop their customers falling victim to these companies by doing more to tell them about mis-sold PPI and the compensation they’re entitled to.
“But it is vital that the regulator introduces tougher measures to protect people from predatory claims firms. People were endlessly pestered about making a claim for an accident, now it is PPI and there will undoubtedly be another consumer crisis they try to exploit.”