Mystery shop finds claims firms are preying on vulnerable consumers
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An independent study conducted on behalf of the British Bankers’ Association has found that consumers could be putting their money at riskby paying claims handlers that mismanage their complaints.
It says too many companies still lure customers with the hope of cancelling their debts without any evidence that they can do so, while others demand upfront payments.
The GfK NOP survey, based on a mystery shop of claims management firms, finds that some are targeting vulnerable consumers in financial difficulty and promising them compensation, but not highlighting risks such as the possible damage to their credit ratings from County Court Judgements It also finds that advertisements can mislead consumers with ‘no win, no fee’ pledges, while some firms offer unrealistic timescales for the claims process or unsubstantiated success rates.
The BBA says claims handlers are not required to have any qualifications so some have significant knowledge gaps and can provide incorrect advice.
Eric Leenders, executive director for retail banking at the BBA, says: “What was once a legal service is becoming a mass-market industry with quality control problems. If customers feel they need help progressing complaints they can consult the Banking Code which includes a list of free services.”
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Readers' comments (4)
Anonymous | 21 Oct 2009 4:32 pm
Why is it that all the press about claims management companies is negative? Why isn't anyone commending the companies that work hard to assist consumers that have been completely shafted and mis-treated by their lender? I'm sure the Banking Code will be on the consumer's side.... There are firms out there that do a good job, provide an honest service and run their business in strict accordance with the MoJ guidelines. It is not the Claims Managment Companies fault that the industry is poorly regulated. Maybe the MoJ should have considered this before issuing licences out like sweets to anyone who asked?
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Anonymous | 21 Oct 2009 4:35 pm
Also - why are there never any articles about the appalling way that customers are treated by their lender? Publishing articles that are clearly in support of lenders is another instance of unfair treatment of consumers. Yes, you have rights, but we're going to scare you out of exercising them. Completely ridiculous.
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Anonymous | 21 Oct 2009 4:43 pm
Of course, we should be recommending that consumers put all their hard earned cash into their bank accounts so that their lender can fritter it all away on sub-prime lending. I wonder what an independent survey of how lenders have treated their consumers would reveal...
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Simon Helliwell | 26 Oct 2009 12:55 pm
I read with interest again the article which is innacurate and miss leading, whilst there are unfortunately many claims companies who have no solution, little knowledge of law and may prey on the financially vulnerable, it is unfair to generalise, may be the media should address the issues, speak to a credible claims company who have a real solution and good understanding of law, so we can lift the lid off the mythology behind what really is achieveable.
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