Like any industry, there is the good and the bad and those that just want to scam you. Claim Management companies provide a service to process your mis-sold PPI claim on your behalf. The entire banking industry and their supporters believe that you do not need to use these companies to submit a complaint and that you can do it yourself. This is entirely true and if you have the skills and time, I suggest that you do submit your complaint yourself.
There are numerous reputable websites to help you to do this including the following:
Which: How to reclaim mis sold PPI
Money Saving Expert: PPI Loan Insurance
FCA: Claim mis sold PPI
However, for those that don’t have the time, skills or inclination or are just too busy or tired, using a Claims Management Company means that someone else will do all the work for you. This will come at a cost, but if you are not going to get around to doing it yourself then receiving a refund minus a fee is better than receiving no refund at all.
So how do you choose a company that is not going to scam you?
(1) Never, ever, pay an upfront fee. I would be very cautious of any company that wanted your payment details upfront. Legitimate claims management companies calculate their fees based on a percentage of the total compensation paid out and deduct it at the end of a claim.
(2) Check if you still must pay a fee if the refund is offset by the lender. For example, the bank reduces your loan or credit card balance instead of sending the refund to you. This means that you owe less over the term of the loan or credit card but do not receive an actual refund. Will you still be expected to pay a fee to the Claims Management Company? (If the credit card or loan are now closed, then this will not be an issue)
(3) If you receive a text message stating that you are owed a specific amount of money for your PPI refund, they are lying. No Claims Management or Marketing Company has access to your bank records to provide this information to you. They are just guessing. They do not even know if you have PPI. It is also illegal for companies to contact you in this way without your consent. If you haven’t previously opted-in to the company for text marketing then, chances are, the message is a scam.
(4) If you receive a cold call about PPI, never disclose your bank account or personal details over the telephone. If you are in doubt, ask the caller for a direct telephone number and call them back. This will help you verify their identity and should help you identify if you are talking to a legitimate company or a scammer.
(5) All claims management companies must be regulated by the Claims Management Regulator. You can check that the company is currently registered as a regulated business here.
(6) The Claims Management Companies Terms and Conditions for the service you are looking at purchasing must be displayed on their website. Read these thoroughly to make sure you understand what you are signing up for.
(7) If you are Bankrupt or even if you have been discharged, you will not receive your refund. It will be sent to the Official Receiver or your Trustee and the Claims Management company may still charge you a fee. There is no benefit to you to process a claim if you have been Bankrupt.
(8) If you are currently in an IVA, the refund will be sent to your Insolvency Practitioner and the Claims Management company may still charge you a fee. It is best if you discuss claiming any mis-sold PPI with your Insolvency Practitioner.
(9) If you have completed an IVA, the Terms and Conditions of your IVA will determine if you can keep the refund or if your Insolvency Practitioner is entitled to it. If you decide you would prefer to use a Claims Management Company instead of processing a claim yourself then you will need to use a specialist Claims Management Company who is experienced in PPI and completed IVA. You will also want to make sure that if the refund is sent to your Insolvency Practitioner or the bank utilises it to offset your debt, there is no charge.