Brokers warned to tread carefully with claims management firms

Claims management firm Credit Issues is urging brokers to complete thorough due diligence checks on claims management companies before entering into any agreement.

As diversification continues to play a key role with brokers looking towards generating new income streams, Credit Issues has warned firms that in order to reap the potentially lucrative benefits of claims referrals they need to approach any affiliations carefully.

The firm pointed to the many claims management companies currently enticing brokers with promises of large referral fees but was at pains to stress the importance of putting such firm’s reputations and track records under scrutiny to secure good service on behalf of their clients.

Claims management firms must be regulated by the Ministry of Justice. Any Solicitor used must be regulated by the Solicitors Regulatory Authority and it is vital that they should possess the specialist knowledge required and that firms have high level barristers at their disposal.

A proven track record and reputation are also crucial combined with a strong, experienced management team and staff.

Customers of Credit Issues have already been able to walk away from over £500,000 of consumer debt as at the first month of 2009 and the firm is targeting writing off £10 million over the course of 2009.

Lee Lipson, legal services director at Credit Issues, says: “While it is easy to wax lyrical about the potential benefits that claims management companies can add to intermediary offerings, it is also important to make intermediaries aware that choosing the right affiliation is a must.

“As with entering into any business arrangement the act of due diligence is vital to securing the reputation of all individual firms as ultimately they, along with their clients, will be the ones losing out.

“January has proved to be a fantastic start to 2009 for Credit Issues and the many clients and advisers we have challenged debt on behalf of. We have great plans for the rest of the year and urge intermediaries to look to this sector of the market but to remember to do their homework when doing so.”