PPI claims management firms aren't all evil!

Craig Lowther
by Lovemoney Staff Craig Lowther on 06 November 2012  |  Comments 15 comments

Guest blogger Craig Lowther of MoneyBoomerang argues the case for why PPI claims management firms are getting a rough deal.

PPI claims management firms aren't all evil!

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.

Public backlash

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.

Go-it-alone

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.

At the risk of incurring the readers' wrath, I believe it’s naive to suggest the PPI claims process is a walk in the park and simply a matter of filling in a form and sticking it in the post.

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.

Adding value

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.

Free agents

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.

More on PPI:

How to claim your PPI compensation

The real result of PPI mis-selling

The most successful PPI complaints

PPI tops complaints to the Financial Ombudsman

Building societies bombarded with bogus PPI claims

Customers could wait up to a year for PPI compensation

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Comments (15)

  • Quarket
    Love rating 26
    Quarket said

    Craig makes some fair points in this article and I now don't view all CMCs as having horns, but why does the fee have to be as large as 25%? That seems excessive to me.

    Report on 07 November 2012  |  Love thisLove  0 loves
  • oldbloke
    Love rating 3
    oldbloke said

    Percentage fees are always tricky. Is a £2,000 claim twice as difficult as a £1,000 claim? PPI claims WERE also trickier in the past than now, I'd say, and 25% has become a bit of a 'norm' without much thought going into why it should be 25%. I know one CMC (formerly charging 25%) has set up a flat fee scheme (of £200 - yes, really - with £30 upfront)...as it now feels claims are 'pretty routine' and can't justify a 25% fee...the worry there, of course, is that they run off with the £30 (but as it's been around since 2007, I'd say not) or "you get what you pay for" but it makes sense that a claim should take much less time nowadays. One other thing - I saw on Watchdog a case where a person was charged a (25%) fee on the PPI premiums he was not going to pay for the next 10 years (or something) so he ended up getting back nothing on the basis he was saving lots of money in the future (and actually ended up owing a fee, whilst getting nothing back in hard cash). I didn't think that was fair but I gather it's in the CMC contract - they charge a fee on whatever they recover from past payments and whatever you save on future payments....

    Report on 07 November 2012  |  Love thisLove  0 loves
  • jgs43
    Love rating 2
    jgs43 said

    The main problem is that there is no liaisson between PPI Claim companies hence you get one after another cold calling looking for business. A number are also aggressive when told that there is no requirement for their services. While some of these companies may well be acting fairly the public perception is that they are leaches in the same manner as accident claim firms, environmental improvement companies , etc. It is time that these type of compamnies were forced to act within the law re cold calling and the TPS and OFCOM were given teeth with which to act.

    As you may judge from the tone of this comment I am sick of continual pestering by all these types of companies despite being both TPS registered and having unlisted telephone numbers.

    Report on 07 November 2012  |  Love thisLove  1 love
  • ronat42
    Love rating 71
    ronat42 said

    How about a simple blanket ban on cold calling. I average about 20 per week, not including those which simply ring and then hang up in spite of being registered with the TPS and I have never once found one of them to be relevant or of interest. Some do apologise, many just hang up and one recently responded with a stream of 4 letter abuse. If your company prospers without cold calls then there is no reason why others can't. Emails are not a problem and a single sheet of paper with all honest companies listed could be circulated or even published in the national newspapers would suffice.

    Report on 07 November 2012  |  Love thisLove  0 loves
  • ronat42
    Love rating 71
    ronat42 said

    Final thought, we could have a new industry of legal firms prosecuting each other for being a public nuisance.

    Report on 07 November 2012  |  Love thisLove  0 loves
  • Tanni
    Love rating 92
    Tanni said

    Money money money is the reason these claims companies and other firms ring around being a nuisance. The sales reps are money motivated, the firms are money motivated, the lawyers are money motivated and so are the banks that sold you PPI in the first place. Some customers are also money motivated and as a result all people are bombarded with these unsolicited calls.

    Kill the greed and you'll soon get rid of this nuisance.

    Report on 07 November 2012  |  Love thisLove  1 love
  • duncanw
    Love rating 1
    duncanw said

    i`ve lodged 2 complaints about ppi by doing it directly myself,the first was with natwest and i got back almost 4 times the premiums i paid which included compounded interest and am awaitng for a response of capital one,if you want to use a claims company,fine but try doing it yourself first,if you don`t succed then try a claims company

    Report on 07 November 2012  |  Love thisLove  0 loves
  • spider589
    Love rating 4
    spider589 said

    Sorry, but have I missed something here, is it possible to claim against your PPI seller even if you would have been paid out in the event of loss of job etc? I am not the most financially savvy of people, but I always told lenders a firm but polite "no" to this kind of bolt-on to my loan payments, maybe I should have had the foresight to think I would get my money back fourfold in a few years! - I know an IFA who is being asked to claim on behalf of a client who had his mortgage paid for a year by his PPI - Has the compo culture finally gone mad?

    Report on 07 November 2012  |  Love thisLove  0 loves
  • hopefultom
    Love rating 50
    hopefultom said

    So, the author of this piece claims that a £900 claim was sucessfully escalated to a refund of £19,000 by adding compound interest.

    I don't think so! In your dreams, maybe.

    Sorry but your credibility has gone out the window with that kind of gibberish

    Report on 08 November 2012  |  Love thisLove  0 loves
  • Danceswithchimps
    Love rating 0
    Danceswithchimps said

    The point being that you are the same type of people as those greedy money grabbing a-holes who run the banks, not crusaders of right and good as you would have us believe. It is this relentless pursuit of profit above all else that is causing the moral and environmental rot in our society and is what most people are starting to realise and rebel against. There is nothing wrong with being money savvy, the people on this website arm themselves with knowledge so that we have a modicum of financial common sense to defend ouselves against the greed of corperates and pathetic vulture companies such as yours, the need for which is bourne purely because of others who have the same priorities as you and that now run our institutions. If the government and law courts performed their roles properly they would demand that banks pro-actively sought out their victims and paid back every last penny stolen from them, on pain of imprisonment. This would stop the need for your sordid little industry the phone calls the texts and the relentless crossing of our moral boundaries. A thief is a theif no matter what guise he takes.

    Report on 09 November 2012  |  Love thisLove  0 loves
  • Craig Lowther
    Love rating 0
    Craig Lowther said

    Hello all. As I suspected there have been a number of heated comments after my article! I can't do anything about this, of course, and people have the right to their views but I can say in all honesty that we are not a sordid business, as one reader referred to us. We have never sent texts or cold-called/harrassed anyone. And we want this to stop happening as much as you do.

    Yes, we are a business and like any other business we have financial goals and are structured to make a profit. But we treat our customers fairly on the way to achieving those goals and also look after our staff. In fact, we actively recruited the majority of people who work for us from the unemployed or people who had left school with no job — is that the behaviour of a sordid company?

    Believe it or not, you can be a claims management company and be human - although I know that in some cases this will fall on deaf ears!

    Duncanw makes the point that people should try putting in a claim themselves first. We're not against this at all. In fact, across our site and at various points in the application process we remind people that they can put in a claim without us. We are very transparent on this point. But if they don't want to, or if they try it themselves and are rejected, then we are here for them.

    Quarket, meanwhile, asked why our fee is 25% and it's a question I often get asked. The answer is that we employ nearly 80 staff and have a lot of overheads to cover as a result. Also, the work we do can be very time-consuming - it's by no means simply a case of send off a letter to a bank and wait for the cheque to arrive. We feel the service we offer justifies this fee, although accept that some people will simply not want to pay it.

    Anyway, I'm happy to answer any questions people have - just post them here and I'll get back to you as soon as I can.

    Report on 12 November 2012  |  Love thisLove  0 loves
  • hopefultom
    Love rating 50
    hopefultom said

    Mr Lowther

    With reference to your last paragraph, perhaps you would be good enough to comment on the point that I raised ( and you overlooked )

    How is a claim for £900 escalated to a settlement of £19,000 by compound interest.

    Obviously you are going to refuse to divulge individual details, but there is nothing to stop you giving us an anonymous worked example.

    I look forward to your comments, but I won't hold my breath.

    Report on 12 November 2012  |  Love thisLove  0 loves
  • Craig Lowther
    Love rating 0
    Craig Lowther said

    Hello hopefultom and apologies for the delay in my reply. I will certainly provide more details on that particular example tomorrow. It was a case where we were able to go back 15 years ago and involved several re-finances from an original premium net of loan interest at just £900. I am waiting on confirmation of the breakdown so will come back to you on this. Many thanks

    Report on 12 November 2012  |  Love thisLove  0 loves
  • Craig Lowther
    Love rating 0
    Craig Lowther said

    Hi again hopefultom. Having looked into the case you have asked about, I can say that it related to a credit card claim. The original finance was taken out in 1996 and like so many of our credit card cases, the PPI was added without the clients knowledge or consent. As minimum payments were made on that account, no inroads were made on the PPI premium and so the interest rate on the credit card accrued, this snowballed the amount owing, which, when you add compound interest on the rapidly increasing sum, resulted in a very significant claim for the interest payable on the claim. It was the higher interest rate on the card which kept bumping up the principal owed. This is mostly what we find with particularly old credit card claims.

    Turning to another comment raised regarding an outright ban on cold calls and texts, I would welcome this with open arms. It needs a special task force to be set up to target the culprits and look behind the technology they use to avoid the regulators. I would like to see stiff fines being issued to the CMC's who gain work from third parties who they use to distance themselves from the coal face. It's not good enough and the public deserve better protection from these operators who are incredibly annoying and intrusive.

    Report on 13 November 2012  |  Love thisLove  0 loves
  • hopefultom
    Love rating 50
    hopefultom said

    Hello Mr Lowther

    Thank you for your reply.It is a shame that you did not see fit to be a little less vague; in fact you have given no specifics, except that the financial vehicle involved was a credit card and, that the term was 15 years, which I had already guessed.

    What interest rates were applied to make £900, paid in monthly instalments, over 15 years, turn into £19,000 ?

    I would dearly love to know which financial institution you claim made this massive " repayment " but, again I won't hold my breath.

    Report on 14 November 2012  |  Love thisLove  0 loves

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