Using the agent to claim bank charge refund ‘unnecessary’
THE GLASGOW HERALD - 5TH MAY 2007
Where there's a financial car crash, there's an ambulance chaser. First it was endowment claims, then personal injuries, and now it has moved on to bank charges. According to the comparison website uSwitch, more than 300 "claims handling" firms have sprung up almost overnight to jump on the bandwagon of refund claims against banks for "illegal" penalty fees.
It says most of the 305 firms it has tracked down charge 25-per cent of any refund from the bank, although one, Charge Claim, asks up to 40-per cent.
Until last week, claim management firms could set up and practice with no regulation, which also means they have had full access to trusting individuals' personal details. Now they are regulated by the Department of Constitutional Affairs, they are supposed to follow strict rules of conduct, and must offer consumers clear information about the options available to them.
But Mike Naylor at uSwitch says hiring an agent is "totally unnecessary", arguing it is not a difficult process and there is no evidence to show that firms are any more successful than individual complainants.
"We strongly advise people who have been hit with unfair bank charges to steer clear of these companies. For just £10, a fraction of the fee these firms are charging, consumers can manage their own claim.
"In the first instance, if customers are unhappy, they should complain to their bank and ask for a refund of charges. It will cost just £10 to get copies of statements for the past six years to identify all the charges that have been incurred. If their bank fails to deal with the complaint satisfactorily, the consumer can complain to the Financial Ombudsman Service (FOS) for free."
If the insurance sector is anything to go by, people who complain directly will be taken more seriously.
The Association of British Insurers has reported that 71-per cent of claims made direct to insurers were accepted, compared with 51-per cent from claims handlers. The average payout to someone using an agent was £1400, after claims handlers deducted their fee, compared with £3200 won by applying direct. Claims managers have challenged this, but only a handful were prepared to disclose their own performance figures in a survey by Money Management magazine.
"This suggests that only a few very large firms have any real chance of beating these figures," says the magazine. It says there should be no need to use an agent for mortgage endowment claims as there's a standard claims procedure laid down by the regulator, but admits the equation might be different where legal advice (as in personal injuries) might be essential, or where you really haven't the time to pursue the claim yourself.
The latest target for claims firms is the mis-selling of payment protection insurance, where some firms are now reporting successful settlements in a bid to drum up business.
But consumer watchdog Which? says it is simple to take a payment protection insurance case to the Financial Ombudsman Service, which has so far upheld 40-per cent of cases brought, and that there seems little difference in success rates between individual claims and those brought by agents. Simon Burgess, of low-cost payment protection insurance provider britishinsurance.com, set up a payment protection insurance claims service last year, but withdrew it in favour of offering free advice to consumers on how to complain to the ombudsman.
