Many financial products have been mis-sold through the years from endowment policies to accident claims and, more recently, there have been bank charges. Lawyers make hefty profits along the way using their catchy slogans - no win; no fee - where there is blame, there is a claim. But of course they are not challenging the banks through the goodness of their hearts - Oh no; there is a fee to pay.
Typically, they charge 25 per cent excluding VAT, which is paid out of the compensation awarded. You can save yourself these fees by preparing and submitting a claim yourself, and even if it is rejected you can approach the Financial Ombudsman Service (FOS). However, it is time consuming and you may think that a professional can submit a more persuasive claim and that you will be awarded more compensation at the end of the day.
There are many tricks of the trade which the untrained amateur claimant is not aware of. Rejection letters issued by insurers and banks will give, what appear to be, plausible reasons for rejecting a claim. However a specialist lawyer working for a claims company will identify these excuses and pursue the claim with renewed vigor. Their course of action may mean submitting the claim to the FOS and even if it is rejected an appeal can be lodged on behalf of the claimant.
However the large number of claims being submitted to the FOS has led to long delays of up to 10 months before a case is resolved. The situation is exacerbated by the way insurers and banks are dragging their feet.
A high street Building Society has thrown these accusations back in the face of the claims companies, saying that they often use template letters, which do not truly reflect the issues raised by the claimant. Consequently the bank has to write back requesting more details of the case, which delays the whole process. They would prefer the claimant to prepare their own case, as the presence of third parties confuses the issue.
Insurers and banks have had strained relationships with the majority of claim management companies over the years. A spokes person from the Abbey maintains that most people can submit their own claims by contacting their insurer or bank direct. 30 to 40 per cent of your compensation is taken by the company submitting the claim, often for doing very little, he said.
A Director of money supermarket, the price comparison site, said that the popularity of claims management companies handling PPI mis-selling could lead to frivolous claims being submitted. They tend to encourage claimants to proceed with claims which have very little substantial evidence to back them up, he said. Claim management companies deny these accusations, saying that they vet their claimants very carefully and do not prepare frivolous or bogus claims.
He continued by saying that policyholders should not dispense with their insurance when it was most needed. They should ask themselves whether they could do without their insurance if they became unemployed. Cases have been reported where people have cancelled their PPI only to lose their jobs soon afterwards, so it is prudent to try to keep your cover in place.
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