Are claims management companies worth it?
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Payment protection insurance (PPI) has been widely mis-sold. But you can easily make a complaint yourself – there is lots of free help available.
What claims management companies do
They take up complaints against financial services companies on behalf of people like you. They deal with many types of complaints about financial services but are particularly interested in PPI complaints at the moment.
They may contact you by letter, telephone or text, offer to make a complaint on your behalf and promise to get you a large compensation payment. But their charges can be high. For example, if you are awarded £1,000 in compensation you could typically miss out on around £300 of that money.
If you’re contacted by a claims management company
Firstly make sure you have a PPI policy. There is evidence to suggest that complaints management companies are making complaints on behalf of people who have never been sold a policy. You can do this by checking your paperwork. It is often sold alongside credit cards, loans or mortgages.
Making a complaint
You can make a complaint yourself. You’ll need to contact the business that sold you the policy. It’s usually best to do this in writing and check the firm has received your complaint. For more information, read our Making a complaint (PDF) printed guide.
If you are unsure whether you have a PPI policy or whether you want to make a complaint our Money Advisers may be able to help. You will not be charged for this service.
If you need help making a complaint, there is free support available. For example, the Financial Ombudsman Service (the Ombudsman) has an online PPI resource that includes a questionnaire to make your complaint. This will help you include all the relevant information.
Don’t worry if you’re not confident in dealing with the firm. As long as you have given the firm eight weeks to deal with your complaint, you can ask the Ombudsman to take up the matter if the firm hasn’t responded or if you’re not happy with their response. The Ombudsman is a free, independent service for settling disputes that consumers and financial businesses haven't been able to resolve themselves. The Ombudsman looks at the facts of the case – not at how well you present your complaint.
Many PPI complaints referred to the Ombudsman are found in the consumer’s favour. And their statistics show that if you refer your complaint to them yourself, you are just as likely to win compensation as if you were to pay a claims management company to do it for you.
If you do need somebody to act on your behalf, you could ask your local Citizens Advice Bureau, or a friend, carer or relative, to help. This is your right.
Using a claims management company
If you decide to use a claims management company for any type of complaint, make sure that it is regulated by the Ministry of Justice or is a member of a professional body (for example the Law Society of England and Wales, the Law Society of Northern Ireland or the Law Society of Scotland) because they must meet certain standards. Make sure you understand the fees it charges, and never pay a fee upfront.
If you are unhappy with the service you have received from a claims management company, you can complain directly to the Claims Management Regulator.
The Claims Management Regulation Unit on the Ministry of Justice website gives you all the steps you need to take before a complaint can be heard.
You can also find more information on mis-sold financial products and services such as payment protection insurance (PPI) and insurance.
Stop unwanted calls or post
If you want to avoid being contacted by a claims management company (or other company without you having requested it) you can register with the Telephone Preference Service to stop receiving unsolicited sales or marketing calls, and with the Mailing Preference Service to stop unwanted post.
Whatever your situation, get clear, unbiased information and advice from the Money Advice Service. If you can’t find what you’re looking for on our website or have a question about money, call one of our trained advisers on 0300 500 5000.