PPI claims management firms aren't all evil!
Guest blogger Craig Lowther of MoneyBoomerang argues the case for why PPI claims management firms are getting a rough deal.
Editor's note: For many years now, lovemoney.com has been clear in our viewpoint of payment protection insurance (PPI) claims management firms; namely, that we aren't big fans. In most cases, we believe you are being charged a fee for something you could easily do yourself.
However, we've decided to give one claims management company the opportunity to present the other side of the argument and explain why they have their place. What follows are the views of Craig Lowther, managing director of claims firm MoneyBoomerang.
Believe it or not only five years ago the PPI claims industry had a great deal of integrity and respect.
It’s hard for many people to understand this now, especially after so many of us have been bombarded with unsolicited text messages, emails and phone calls.
This includes me, by the way, and I run a PPI claims management company (CMC)!
But it’s a claims company, I hasten to add, that has never sent a single unsolicited text message or cold-called someone. That’s just not the way we roll, and we aren't alone in that.
Unfortunately, over the past ten years there has been an explosion in the number of ‘fly-by-night’ companies that pollute our industry, damage its reputation and have no regard whatsoever for the public.
These firms harass people relentlessly and will even go so far as knowingly submitting claims despite there being no evidence of the claimant ever having taken out a PPI policy.
This is borderline criminal and makes it easy for the banks to turn the attention away from themselves and onto the ‘parasitical’ and ‘corrupt’ claims companies.
To try to clean up the industry, we have lobbied the Ministry of Justice for all such grubby sales techniques to be outlawed. As yet, unfortunately, we’ve heard nothing back.
All in all, the PPI claims industry is in one hell of a mess. CMCs are now receiving as much backlash from the public as the lenders who were responsible for the problem in the first place.
One effect of the rise of dubious CMCs is that many consumer groups have been increasingly urging customers that there is need to use a claims management company at all.
Instead, they argue that the process is as simple as downloading and completing an online form — and that people should do the whole thing themselves.
It’s true that in many cases this approach works, but in many other cases, there’s no denying it doesn’t.
Nevertheless, that people can submit claims directly is something we actively make them aware of on our site and at multiple points during their application with us.
Where I believe good CMCs can add real value, though, is in more complex cases. For example, what about cases where the lender is insolvent?
What about cases that fall outside the January 2005 Financial Services Authority remit?
What about cases where lenders simply do not respond to the letter of complaint, or send a quick letter rebuffing the claim?
And what about customers claiming on behalf of a deceased person?
Our vast experience in this sector really helps. Did you know, for example, that you can ask the lender to pay statutory interest on your claim? We’ve had customers where the original claim was just £900 but the compound interest we fought for brought the payment up to around £19,000.
Also, how many people who have made claims on PPI mis-sold on a loan know that each time they refinanced that loan (and many did), that amounted to a separate claim?
The bank certainly wouldn’t have told them that, take it from me. And do you think a bank would alert claimants to other potential claims on separate accounts they have held with it? Not on your nelly.
These, however, are things that we look into as a matter of process.
Its also worth mentioning that many of our customers have come to us having made a claim themselves that was rejected. We have gone back to the lender and secured them a sizeable claim.
It’s because the claims process can be time-consuming and highly complex that I feel justified in charging a 25% — albeit wholly results-based — fee.
Many people gnash and grind their teeth at this fee, but we do not force people into it. Our customers are free agents and make a conscious choice to pay it.
So why do people use companies like us? In the vast majority of cases it’s because they say they haven’t got the time or the inclination to do it all themselves.
I’d like to make it clear that while we charge a fee, we are 100% transparent about it and would never charge a penny up-front.
The real danger to consumers are those companies that charge clients before a claim is even successful. This is simply wrong and consumers should avoid these outfits like the plague.
Not all CMCs are the cowboys the public and many in the media make them out to be. But ultimately, of course, that’s for you to decide.
What do you think? Is Craig right that it's just the bad eggs that are giving claims firms a bad name? Do you think there's value in using a CMC? Let us know your thoughts in the comment box below.
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