BBA warns against claims firms
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An independent study for the British Bankers’ Association has found customers could be putting their money at risk by paying consumer claims handlers who mis-manage their complaints.
It says too many companies still lure customers with the hope of striking out their debts without any evidence they can do so, while others demand upfront payments, the GfK NOP survey shows.
The report, based on a “mystery shop” of claims management companies found some are targeting vulnerable consumers in financial difficulties, promising ‘compensation’ but not highlighting key risks such as the possible damage to credit ratings from county court judgements.
It found advertisements can mislead consumers with “no win, no fee” pledges, and some firms offer unrealistic timescales for the claims process and unsubstantiated success rates.
There are no requirements for claims handlers to hold any qualifications, so some show significant knowledge gaps and can provide incorrect advice says the BBA.
Eric Leenders, executive director for retail banking at the BBA, says: “Consumers should be free to take professional advice to help them, but what was once a legal service is now becoming a mass-market industry and that brings with it some significant and fundamental quality control problems.
If customers feel they need help progressing a complaint, they can find real help from reputable and reliable sources.
“As a first step, they could consult The Banking Code, which provides a list of free debt advice services which can offer real help.
“The best advice is, as always, that if something sounds too good to be true, it probably is. Nobody can make debt disappear, but there are many people who are committed to providing quality advice and support.”
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