The mis-selling of Payment Protection Insurance is perhaps the biggest and most costly financial scandal ever in the UK. However, new research has shown that a quarter of people using claims management companies to handle their case are unaware of the fees they will be charged.
Fees for Claims Management Companies
A survey of more than 2,000 people, carried out by Which? and Moneysavingexpert found that 25% said they did not know Claims Management Companies charged a fee for handling their case.
The fees charged by Claims Management Companies are generally around 25% of the claim and can run into many thousands of pounds.
The Claims Management industry has turned into big business, however research shows that they are no more successful in securing a compensation payout than if the claim is made by the individual themselves.
The survey showed that around 50% of people are unaware if this, meaning many successful claimants are needlessly paying away large percentages of their compensation.
Furthermore, 53% of people who had used Claims Management Companies said they would it do so again with the biggest complaint being about value for money.
Which? and Moneysavingexpert have launched a campaign to highlight to people how easy it is to submit claims themselves and avoid paying hefty fees to Claims Management Companies.
Which? executive director, Richard Lloyd, said: “This new research shows that many people don’t realise there are simple, easy to follow steps to reclaim their money for free and so they’re turning to claims management companies, too often unaware they charge a fee.”
Martin Lewis (above) of Moneysavingexpert added: “Sadly PPI has become a cash bonanza for unscrupulous claims companies, who through a series of lies and misdirection are persuading people they are the only option for getting their PPI money back.”
Lewis continued: “If people make a rational decision to give a huge 30pc of what they’re due to a claims handling company in full knowledge they could do it themselves – I’ve no problem.
“Yet sadly very few are in that position.”
“Many are persuaded under false pretences and the dire lack of regulation means it’s tough to tell legit firms from the rest.”
“And worse, if things do go wrong with claims companies, it’s a nightmare to get any redress. This is a billion pound plus industry, it’s too big to be left alone.”