For many years now there has been an unfair stigma around claims management companies (CMCs), thinking that they are money grabbing, pestering companies that are only out to make a quick buck. This is categorically untrue.
In essence what a claims management company does is all of the work for you, when you make a financial complaint against a regulated firm. Not only that, but they push for the highest amount of compensation possible, ensuring you get the redress that you are genuinely owed.
Put simply, the financial institutions really do not like claims management companies, and for good reason. This is because they are always claiming money from them and pushing for the maximum payout possible. Because of this, the financial institutions have put a lot of effort and PR into trying to discredit the claims management companies.
By doing this, it means less claims are made through a CMC, meaning that the policy holder is making the complaint themselves. With this is mind, the banks are aware that it is much easier to fob off a complaint or make an inadequate lower offer than they should, because of the lack of knowledge around the complaints handling procedures the policy holder has.
A common technique the banks will use to reduce the amount they have to pay out in claims is to offer a ‘gesture of goodwill’. For instance someone may make a Payment Protection Insurance (PPI) complaint to their bank, to then receive an offer letter back within a few weeks offering £1000 for example. In most cases the complainant will think they’ve hit the jackpot, sign the forms which legally closes the case and take their money.
In fact with a ‘gesture of goodwill’ offer, the bank is offering a payout without admitting liability. Said complainant in actual fact should have had a payout worth £2,500 but without an expert eye looking over the documentation, how would said complainant ever know the true value of their claim?
The banks will state that you should never use a CMC and to go direct through them as you will not incur any fee. This is clever little trick as it enables them to blind you with long winded, confusing letters meaning they can payout much less than they should be, if at all. In fact when a complaint is settled with a ‘gesture of goodwill’, they are not closing the case as a complaint, but under a different category. This means that the banks statistics and figures look better than they genuinely are.
In these situations, when we get an offer letter with a gesture of goodwill, that screams at us that they are offering less than 50% of what they should be paying. This client would then be passed straight over to the appeals team where we push for a much higher payment.
Using the above figures for an example, we can break it down using the following:
Gesture of good will complainant would receive if claimed on their own: £1000
Offer from bank based on CMC input: £2500
CMC fee (25% + VAT): £750
Total compensation to client after fees: £1750.
As you can see, that is a 75% increase on the amount that the client receives, all because they entrusted their claim to a CMC.
There are many other ways that the firms will try to ensure they payout a smaller amount than they should, if at all.
When submitting a complaint to a firm, the standard response is to send out a questionnaire to the complainant where they will make their decision on the case based upon the answers they receive. When the case handlers review this document they are looking out for any reason that means they can reject the case, and thus avoid a payout.
When a consumer uses a CMC to submit a complaint, part of the deal is that the CMC does all of the work. This includes the filling out of said questionnaire. The firms are aware of this, so not only do they tend to ignore any requests to send these to the CMC, but they purposely send them to the client direct in the hope that this will put a bad light on the CMC as well as the client then filling out the questionnaire themselves. If the client fills out the questionnaire themselves, there is a much higher chance of the firm being able to reject the case. This is another example of how the firms are doing everything in their power to discredit claims management companies, for their own personal gain. Their interests are not in that of the consumer, but their own shareholders.
Firms will often reject blatantly mis-sold cases just to keep the money in their pockets. The rejection letter that is sent to the client is normally a ten page, very convincing looking document breaking down all the different reasons for as to why they are not upholding the complaint. To the untrained eye that isn’t immersed in claims management on a daily basis, this letter appears to hold a lot of weight and tends to put a halt on the proceedings.
In fact the reality is that this is a highly generic letter that goes out to most complainants with the sole aim of stopping them taking the issue further and instilling an ‘at least I tried’ mentality. It is not until you deal with these letters on a daily basis that the true colours of what is going on become apparent.
Once a firm has rejected a complaint, many people think that this is the end of the road in terms of their complaint. This is not the case. Here at It IS Your Money we regularly have to explain to people that even though the rejection letter(s) they have received seems very official and bespoke to them, they do in fact have a lot of rights when it comes to taking the issue further and getting the redress they deserve. This is where we then take the case on to the Financial Ombudsman Service on your behalf. Again, this can be a daunting task, which is why it helps to have a CMC looking over the whole process for you.
As you can see from the above content, the firms are not always as transparent as they seem. This makes a fierce battleground on the front line of financial complaints and is why we cannot recommend the use of our services enough.
Here at It IS Your Money, we operate solely on a No Win No Fee basis. This means it is in our best interest to win you as much compensation as possible.
We offer a wide range of financial claims services in the following areas:
- Payment Protection Insurance (PPI)
- Packaged Bank Accounts
- Free Standing Additional Voluntary Contributions (FSAVC)
- Pension Mortgages
If you would like to speak to us about our services feel free to call us on 0333 321 0123, email us at firstname.lastname@example.org or write to us at the address stated above.