Why you shouldn't use a claim firm to recover unfair bank charges or mis-sold PPI.
If you are thinking of reclaiming mis-sold PPI or unfair bank charges, think again before employing the services of so-called `claims specialists'.
Claims specialists or claims management companies offer to take on a client's case against a lender in return for a slice of the eventual refund. A quick search on Google shows there are loads of these firms -- including Claim2Gain, PPI Claims Made Simple, Uclaimugain, and ConkersClaims -- queuing up to take your money.
But these `experts' don't offer anything above what consumers could do for themselves. Meanwhile the firms concerned are making a packet.
Why make a claim
The past year has seen the scale of mis-selling in the PPI market become clearer and consumer groups, newspapers and financial experts are all urging consumers to claim back money for insurance policies that were over-priced and unsuitable for their circumstances.
For more details about why you might want to make a claim check out fellow Fool Cliff D'Arcy's article about Reclaiming Rip-Off Insurance Premiums.
Claims specialists
Claims specialists, often dubbed `ambulance chasers' are nothing new. Typically they offer "no win, no fee" deals for anything from accidents to underperforming endowment mortgages. But the high number of people reclaiming mis-sold PPI has spurred them on to become involved in action against high street banks and lenders, with many cold-calling potential customers. Bank charges - which are currently being contested by the Office of Fair Trading in court - are another area where claims firms are cashing in.
The firms insist on anything up to 25% of the sum reclaimed, even though in most cases reclaiming the money is a simple and straightforward process.
For example, Conkers Claims is part of Brunel Franklin which offers to help consumers claim back money for mis-sold endowment mortgages, bonds and PPI as well as unfair credit card and bank charges. For PPI claims it charges 25% of the compensation plus VAT. This equates to almost a third of the recovered amount; if you were offered £6,000 back from a lender, for example, Conkers would take a total of £1,762.50 (£1,500 plus £262.50 VAT).
Uclaimugain.co.uk takes a different approach; instead of managing the claim on your behalf it sells `PPI Claims Packs' which supposedly contain all the information, template letters and guidance you need to make a claim. PPI packs cost £49.99, while bank charges or mortgage endowments packs £37.49 each.
DIY
However there is absolutely no reason why consumers wanting to reclaim mis-sold PPI need to use a claims specialist or buy information about the claims process. The Which? website, among others, has letter templates you can download, fill in and send off. Importantly, by doing it yourself you retain control and get to keep 100% of any money awarded to you.
Finally, although these firms may boast that they're experts who will get you the maximum compensation possible, there's no evidence to show that claims specialists are any more successful at getting money back from banks and other institutions than consumers going it alone. So don't waste your time and money on these firms.