In April this year the high court ordered high street banks to pay back billions of pounds to millions of consumers after mis-selling them Payment Protection Insurance or PPI.
But if you're eligible - beware. Claims management companies offering to fight your case could see you losing out for a second time. Riz Lateef investigates.
In order to see this content you need to have both Javascript enabled and Flash installed. Visit BBC Webwise for full instructions. If you're reading via RSS, you'll need to visit the blog to access this content.
An estimated 2.5million people were mis-sold PPI by banks and credit companies - and now there's an estimated four and a half billion pounds waiting to be reclaimed.
But if you were one of the unlucky ones how do you go about getting your money back?
Well Claims Management Companies like Gladstone Brookes and iSmart Solutions believe they have the answer. For a cut of the cash they're offering to do all the work for you - all you have to do is sit back and wait for the cheque to arrive. Sounds easy, but Watchdog viewers have told us that these companies don't always deliver what they promise.
Richard Abbot paid Gladstone Brookes £50 to look after his claim - however after just a couple of weeks the company told him that they couldn't help after all. And Mary Munroe had a similar experience with We Fight Any Claim - they told her she was entitled to over six thousand pounds but she is yet to see a penny.
But should they have bothered using a Claims Management Company in the first place?
Tony Boorman from the Financial Ombudsman thinks not. He told Watchdog: "If you want to make a complaint about payment protection insurance it really is straightforward and it's certainly something that I'd advise you can do yourself."
The only thing a claims management company can do is act as a middle man - contacting a bank or financial ombudsman on your behalf. They can't promise to get you anything that you couldn't get if you claimed on your own. In fact the Ministry of Justice, which regulates claims industries, forbids companies from telling customers they'll get a more favourable outcome if they use them rather than making a claim by themselves. But as Watchdog discovered, not all companies are sticking to the rules.
Three watchdog researchers contacted twelve claims management companies posing as consumers who had been mis-sold PPI and asked them what the advantages were of using their services over going it alone. Half of the companies we spoke to broke the Ministry of Justice rules by telling them that they'd get more money, or get it more quickly if they used a claims company. One company - Tucan - even told one researcher they couldn't claim on their own without a Ministry of Justice licence. These claims are completely false.
All of the Claims Management Companies we contacted offered to work on a no-win, no-fee basis, and said they would only take their cut, if they got you a refund. So it seems you've got nothing to lose, right? Wrong - after further discussion with some of the companies it transpired that they wanted some of their fees up front.
Helen Elrick paid Tucan Claims Limited £249.99 upfront to sort out her PPI compensation. After a year of waiting the bank finally paid out - sending Tucan a cheque for £1548. But Tucan didn't forward this on to Helen, instead they sent her a bill for their 10% fee ON TOP of the £250 she had already paid. Helen and her husband paid the 10% but despite this they have yet to receive any of their PPI refund.
So far this year the banks have already paid out £215million to people who were mis-sold PPI. But if you're planning to get your money back the words of the Financial Ombudsmen couldn't be clearer...Do it yourself.
BELMONT THORNTON
Belmont Thornton has not been able to view this Programme in advance.
We do not accept the calls evidence a breach of the rules --- claiming expertise is not objectionable and the full calls are fair claims to expertise, experience and resources.
GLADSTONE BROOKES
All Gladstone Brookes staff are made aware of the MOJ guidelines and are trained appropriately to ensure our regulatory compliance. We deem it essential that our compliance and customer service are of the highest standard. To ensure this, we have set up our systems to reduce the risk of those Regulations being breached and our service levels being reduced. For example, Gladstone Brookes employs a team of auditors who randomly review a selection of the inbound calls made to our Initial Vetting Team. In addition, we employ a team who audit the ongoing handling of our Clients' complaints. The findings from these audits are then fed back to the teams / individuals to ensure ongoing training is sufficient.
With regards to the calls made by Watchdog, we note that you have not sent us call recordings, complete transcripts or the date and time to enable us to retrieve the calls and analyse them fully.
We do not agree that Gladstone Brookes mis-sell our services to potential Clients, nor that the calls you highlight are representative of the service given to the vast majority of our Clients. All potential Clients contact Gladstone Brookes via an inbound call to our Initial Vetting Team (or use our on-line facility), as we do not engage in Cold Calling to generate Clients. The Initial Vetting Team will establish whether the Client has grounds to make a complaint and then explain the process and the service that will be provided to them. We do not believe that the isolated statements you have highlighted within this process could be deemed as rendering the service as a whole as mis-sold. However, as stated previously we will be using your feedback to ensure that we improve our service and compliance.
Based solely on the extracts that you have stated in your letter, we accept and regret that these calls potentially breach MOJ Regulations. As stated previously, Gladstone Brookes takes its compliance and customer service very seriously and it is disappointing that the systems we implemented to prevent breaches occurring have not been robust enough to prevent a drop in service levels on these occasions. We can assure you that this has been addressed internally.
Gladstone Brookes do not make verbal contracts with Clients as the initial call is followed up in writing. In the written contracts (which have been verified by the MOJ) we confirm:
a. The client can conduct the complaint themselves by approaching their Bank and the Financial Ombudsman Service free of charge.
b. Should they wish to cancel within 14 days they can do so with no charge.
We believe this supports our assertion that our service is not mis-sold, despite the calls that you have made.
Since March 2011, after consultation with the Ministry of Justice, Gladstone Brookes have not taken upfront fees from Clients.
Gladstone Brookes do not cold call for business. All of our Clients have chosen to contact us in response to our direct marketing, either on the telephone or via our website. In addition, we receive considerable volumes of repeat business (existing clients who want us to represent them with other PPI cases) and word of mouth recommendations (existing clients referring friends or family members) as testament to the good service that we provide.
To conclude, I would like to confirm that Gladstone Brookes welcome the current attempts by Watchdog to highlight the problems within the Claims Management Sector. We would like to reiterate that Gladstone Brookes take compliance and high service levels very seriously. We will continue to work via our auditing and training process to ensure that all Clients who contact us to assist them in bringing their complaints receive the service that they deserve.
On the case of Mr Abbott:
We have looked at the complaint by Mr Abbott and confirm that his bank rejected his compliant on 1st April 2010. We sent Mr Abbott his refund on 10th June 2010. This took longer than we would have wished. We would like to point out that we attempted to help Mr Abbott but were unable to do so as his bank were not regulated at the time of the sale. Under the terms of his agreement with us, we did not charge Mr Abbott for the work we had carried out and we refunded the up front fee that we charged at the time. Mr Abbott has not made any official complaint to Gladstone Brookes. If he had done so, we would have responded to his concerns.
PPI CLAIMLINE:
PPI Claimline has deep concerns about the accuracy and impartiality of Watchdog's investigation. We do not believe that Watchdog is accurately reflecting the conversations that its journalists had with PPI Claimline, nor the complete and detailed information that they received from PPI Claimline staff.
It would have been more appropriate for Watchdog to have devoted time to investigating the many thousands of people who are facing appalling treatment by banks when they try to pursue their claims, and whether regulators are properly doing their job in enforcing fair and speedy bank response to mis-selling claims. We are proud of the work that we have done in supporting people from right across the country to secure the compensation that they deserve when faced with such disgraceful treatment by banks.
TUCAN CLAIMS:
We are deeply concerned by the allegations which were put to us and since receiving your initial correspondence we have conducted a thorough investigation. Although we retain complete records of the calls which we receive we have been unable to trace those which you state were made on the 20th and 23rd May. We note from your correspondence that you will not supply copies of any call recordings held by you and as such we do not believe that we have been afforded an appropriate opportunity to investigate the allegations you have put to it in relation to those calls. Whilst we appreciate that you have provided short paraphrases of the alleged conversation we do not believe that this is sufficient information to enable us to provide a full response.
We confirm that we received a call on the 13th July. We were deeply disappointed that the level of service provided by our employee during this call fell short of the industry leading standards which it normally provides. The employee concerned has been removed from his normal role, disciplined in accordance with company procedure, and is currently undergoing retraining. Whilst the information provided by our employee during the call was totally unacceptable we believe that our clear and comprehensive customer documentation, along with our legally compliant business process, ensures that our customers do not enter into any contract unless they fully understand the service that is to be provided and the costs of that service. It is also important to note that had your researcher completed the process he would have spoken to a quality assurance department who would have checked his understanding of the service and resolved the matters you have identified.
We have made considerable investment in our infrastructure and systems to ensure that we operate compliantly. All of our employees are subjected to rigorous training and assessment prior to commencing their roles, and regularly undertake update and refresher training. Unlike some of our competitors we ensure that every prospective customer receives pre-contract information which clearly explains its service and the costs which are payable. We also believe that it is important to note that our charges are one of the lowest in the industry.
Since the business opened in 2010 it has grown considerably and now provides employment to 94 people. It has obtained compensation on behalf of consumers totalling £7.8 million and is currently progressing in excess of 14,000 claims on behalf of its clients. It undertakes 3.8 million calls per year to prospective clients and its monitoring of those activities have not revealed any pattern of non-compliance.
We are of course aware of the content of the Ministry of Justice Conduct of Authorised Persons Rules 2007 and strive to operate a fully compliant business. We do not suggest in our marketing that we are able to achieve a more favourable outcome than if consumers use the Financial Ombudsman Service. However we
do have substantial evidence of achieving higher levels of compensation on behalf of consumers than that which is offered to claimants as a result of claims made directly to financial institutions.
We also note that the suggestion by Mr Boorman of the Financial Ombudsman Service that the process of obtaining compensation is relatively straightforward and that consumers should act independently. In this regard we believe that it is important to note that although the banks have set aside in excess of £5 billion to pay compensation only a very small percentage of that has actually been paid out. Our experience is that most consumers do not know that they may be eligible and have often lost details of their policies.
The process of establishing whether a payment protection insurance policy exists can be complex and often requires more detailed correspondence with financial institutions; institutions who have repeatedly breached Financial Services Authority (FSA) guidance in dealing with complaints including during the Judicial Review process. Making a complaint to the Financial Ombudsman Service requires knowledge of who the claimant is claiming against and it is this barrier which prevents most consumers from acting independently. Our experience is also that many consumers either do not understand the Financial Ombudsman Service complaint form or are fearful of engaging in that process without support. We believe that the comments made by Mr Boorman are typical of a government agency which does not entirely understand the needs of vulnerable consumers. Therefore in the absence of Citizens Advice having sufficient capacity to support every potential claimant the need is fulfilled by the private sector.
We also believe that there is an element of convenience in using a claims management company and that consumers do not make a decision solely based upon cost. It is also questionable whether the awareness of the mis-selling of payment protection insurance would be as high as it is if claims management companies had not been so proactive in campaigning and challenging financial institutions. Had regulation of those institutions by the Financial Services Authority been effective the mis-selling would not have occurred.
We believe that honest and ethical claims management companies offer a real service to consumers and as we stated in our letter of the 7th September it welcomes any action by the Claims Management Regulator to deal with non-compliance. We were particularly disappointed to see in the Parliamentary Question tabled in the House of Lords on the 11th August that only 18 businesses in the year to March 2011 had their authorisation cancelled by the Regulator for non-compliance with the Rules despite previous publicity from the Ministry of Justice having referred to 349 authorisations being cancelled in the same period.
On Ms Helen Elrick:
The claims discussed within the report have now been settled, and Tucan Claims have advised that they are unable to comment any further.
WE FIGHT ANY CLAIM
We have never claimed that a client's claim could or would be more successful if they employ our services, as opposed to making a claim directly themselves.
In the absence of call recordings or transcripts to evidence your allegations, we do not accept that the guidelines were breached. Notwithstanding this, where any deviation from our required scripting is detected by our quality monitoring team, we will take appropriate steps to rectify the deviation with the individual(s) concerned.
Whilst we do act as a "middle man" in bringing consumer PPI complaints, we are able to add considerable knowledge and experience to the claims process on behalf of consumers, as well as saving the consumer the time involved in corresponding with the banks, hence we charge a reasonable fee for our service.
We note that you have not provided us with call recordings or transcripts and we have some doubt that these were the exact words used by our representative. The words you have quoted appear to have been taken out of context and simply mean that, while it may be relatively straightforward for an individual to initiate a claim for mis-sold PPI against a financial institution, there are often many tactics used by lenders to dispute or reject someone's claim at the first hurdle or to not deal with it at all. We have encountered numerous, well documented, instances where a lender will initially reply to a PPI complaint by stating that it can find no record of the existence of PPI at all, in order to reject a valid claim, only for further investigation by us to prove that PPI does exist after all.
If this is what the representative said [that only 10% of people who claim independently are successful, as opposed to 90% going through CMCs] then it is down to individual error. We previously used similar statistics in relation to the ratio of PPI complaints that the FOS were upholding in favour of consumers i.e. 9 out of 10 were being upheld, although this figure has since reduced.
Ministry of Justice rules do not prohibit the charging of up-front fees. The £245 upfront fee that we charge is to cover the initial process of reviewing a client's circumstances to establish the existence of PPI and the prospects for a successful claim. Our no-win no-fee policy states that should any claim we are dealing with for a client prove to be unsuccessful, we will fully refund all fees that have been paid (save only for a £10 non-refundable administration fee, as per our terms and conditions). This was highlighted in a letter that we wrote to Tony Boorman at the FOS in June 2011.
Please note that, whilst cold calling 'in person' is prohibited under Ministry of Justice
(MOJ) rules, other forms of cold calling (e.g. telephone, email or text) are permitted in accordance with the Direct Marketing Association's Code of Practice. Although we do periodically purchase opted-in data from third parties, all such data is warranted to us as having the client's prior consent to be contacted in connection with financial service related products and services and not specifically prospective claims for missold PPI.
On the case of Mary Munro
[Mrs Munro's case involved] circumstances beyond our control but clearly demonstrate the issues facing claimants when dealing with the banks and lenders trying to obtain redress for PPI mis-selling. We can appreciate Mrs Munro's frustration at these delays but we can assure her that we are working diligently to obtain a favourable outcome for her as soon as possible.
ISMART CONSUMER SOLUTIONS:
iSmart Consumer Solutions has successfully reclaimed mis-sold PPI on a genuine no win / no fee basis for thousands of customers. We provide a specialist service for the victims of PPI mis-selling who, for a variety of reasons, do not wish to make a claim directly for compensation.
We constantly strive to achieve the highest level of customer service possible and welcome feedback, positive or negative, from any source. iSmart is committed to assisting those people who do not wish to make their claim for mis-sold PPI direct to the financial institution.
MINISTRY OF JUSTICE:
A spokesperson for the Claims Management Regulator said:
"We have made it very clear to businesses that we take a zero tolerance approach to any malpractice or attempts to take advantage of consumers. Claims management companies should remain in no doubt that if they breach the rules they will be closed down.
"Consumers do not need to use a claims management firm to make a PPI claim. It can be simpler and cheaper to complain directly to the business that sold PPI to them. There is a range of consumer advice on the MoJ, FSA, FOS and FSCS and DirectGov websites. Consumers who do want to use a claims management company should shop around for the best deal for them and we have warned claims management companies they should not mislead potential clients."
On upfront fees:
"The vast majority of claims businesses that provide PPI claims services do not charge upfront fees (other than small admin fees). Most of them charge at the end and only if a claim is successful. There is therefore no need for consumers to pay large upfront fees. We have recently issued strong guidance to consumers making them aware of this, whilst suggesting that they shop around for a claims business. Consumers should never pay an advance fee, provide credit card details or agree a verbal contract without seeing full details of the offer in writing first."
Questions
1. Why are companies able to breach guidelines on a regular basis and still continue trading? What procedures does the Ministry of Justice have in place to ensure that companies registered with the Ministry of Justice do not breach the Code of Authorised Persons Rules?
"We have made it very clear to businesses that we take a zero tolerance approach to any malpractice or attempts to take advantage of consumers. CMCs should remain in no doubt that if they breach the rules they will be closed down. There will be no let up and we are planning a fresh surge against non compliant CMCs in the financial sector.
"Businesses must comply with the Conduct of Authorised Persons Rules 2007 as a condition of their authorisation. A range of enforcement actions are available to deal with breaches of the rules - ranging from informal action that can include written warnings to formal action which can include imposing conditions on their authorisation and suspension or cancellation of authorisation."
2. Have any companies had their Ministry of Justice registration rescinded as a result of breaching the Code of Authorised Persons Rules? If so, which companies, when and for what reason?
"Since regulation started in April 2007 479 CMCs have had their authorisation cancelled for non compliance with the rules. Details of CMC cancellations can be found on our website at https://www.claimsregulation.gov.uk/search.aspx?search=simple&business=&authID=§or=-1&county=-1&status=11 - although this does not give reasons for cancellations for individual CMCs (there is a specific procedure needed to do that and not feasible in time for this programme)."
5. What will be done by the Ministry of Justice now to ensure behaviour like this does not continue? Will the companies listed above be subject to investigation on the basis of the information we have uncovered?
"We have made it very clear to businesses that we take a zero tolerance approach to any malpractice or attempts to take advantage of consumers. CMCs should remain in no doubt that if they breach the rules they will be closed down.
"We recently conducted a number of audits of several claims management businesses operating in the PPI claims market. This resulted in compliance action to address the problems identified and the issuing of new guidance to all claims businesses on handling PPI claims appropriately.
"We also issued strong guidance advising consumers to shop around for a claims business, and warning that most claims firms do not charge upfront fees. Our advice to consumers on these two common concerns (upfront fees and contracts) is:
• Some CMCs will ask for up front fees of hundreds of pounds to handle PPI claims. Avoid them. Shop around, most CMCs charge at the end and only if claim is successful.
• Never say yes to a CMC until you have had full details of the service and fees. Never say yes on the phone - only agree to contract with CMCs in writing.
• Never pay an advance fee, provide credit card details, or agree a verbal contract without seeing the offer in writing first.
"We investigate all consumer complaints made against businesses and where a breach of the rules is identified, enforcement action is taken that can result in their authorisation being cancelled. "We will of course carefully consider the issues raised about these businesses.
ANDREW WIGMORE - POLICY DIRECTOR CLAIMS STANDARDS COUNCIL
"In response to your programme highlighting the activities of some claims management companies claiming compensation for consumers who have been mis-sold PPI, we would like to make it clear that while some companies present on-going issues that the Ministry of Justice and the Claims Standards Council (CSC) continue to monitor and police, there are many who have offered, and continue to offer, the consumer a valuable service that is transparent and ethical. The facts are that over 80% of claims currently lodged with the Financial Ombudsman Service (FOS) have originated from a claims management company or solicitor and in the vast majority of cases, claims management companies help the consumer receive the compensation they are entitled to.
It is important to recognise that often the consumer does not feel confident that the banks offer them the correct amount of compensation. Certain lenders at least have made claiming difficult. The process is not always easy, contrary to statements made by the FSA , the FOS, Which? and the banks themselves. In our experience many thousands of consumers find the process daunting and do not even understand whether or not they have been mis-sold PPI. (Many do not even realise they were sold PPI.) We fully support the many steps taken by claims management companies to alert consumers of the wide-scale mis-selling of these PPI policies by lenders. Further, there is no verification that offers of redress are either fair or correct, unless consumers use the service of knowledgeable companies, whether claims management companies or solicitors, to verify the figures. Frequently, offers are lower than consumers are entitled to and it is often only through the intervention of such companies, that consumers ultimately receive amended offers, reflecting the true redress they are entitled to.
PPI Claimline have helped the CSC to pioneer standards and protocols with the full co-operation of the Ministry of Justice and other stakeholders. They continue to separate the good from the bad companies and we urge consumers to check and see if a claims management company is a member of the CSC to give them added protection that the company they are dealing with operates to a certain standard.
Tony Boorman from the FOS, recognising that there are good companies offering claims management services to the consumer, called upon the CSC to improve standards - this is exactly what we have done. We consider it vital to provide consumers with informed choice when deciding whether to use a third party to act on their behalf.
We welcome Watchdog's investigation and will continue to support the consumer groups in highlighting misleading malpractice in those companies not wishing to offer an ethical and transparent service."
PPI Claims: beware of losing out a second time...
But if you're eligible - beware. Claims management companies offering to fight your case could see you losing out for a second time. Riz Lateef investigates.
In order to see this content you need to have both Javascript enabled and Flash installed. Visit BBC Webwise for full instructions. If you're reading via RSS, you'll need to visit the blog to access this content.
An estimated 2.5million people were mis-sold PPI by banks and credit companies - and now there's an estimated four and a half billion pounds waiting to be reclaimed.
But if you were one of the unlucky ones how do you go about getting your money back?
Well Claims Management Companies like Gladstone Brookes and iSmart Solutions believe they have the answer. For a cut of the cash they're offering to do all the work for you - all you have to do is sit back and wait for the cheque to arrive. Sounds easy, but Watchdog viewers have told us that these companies don't always deliver what they promise.
Richard Abbot paid Gladstone Brookes £50 to look after his claim - however after just a couple of weeks the company told him that they couldn't help after all. And Mary Munroe had a similar experience with We Fight Any Claim - they told her she was entitled to over six thousand pounds but she is yet to see a penny.
But should they have bothered using a Claims Management Company in the first place?
Tony Boorman from the Financial Ombudsman thinks not. He told Watchdog: "If you want to make a complaint about payment protection insurance it really is straightforward and it's certainly something that I'd advise you can do yourself."
The only thing a claims management company can do is act as a middle man - contacting a bank or financial ombudsman on your behalf. They can't promise to get you anything that you couldn't get if you claimed on your own. In fact the Ministry of Justice, which regulates claims industries, forbids companies from telling customers they'll get a more favourable outcome if they use them rather than making a claim by themselves. But as Watchdog discovered, not all companies are sticking to the rules.
Three watchdog researchers contacted twelve claims management companies posing as consumers who had been mis-sold PPI and asked them what the advantages were of using their services over going it alone. Half of the companies we spoke to broke the Ministry of Justice rules by telling them that they'd get more money, or get it more quickly if they used a claims company. One company - Tucan - even told one researcher they couldn't claim on their own without a Ministry of Justice licence. These claims are completely false.
All of the Claims Management Companies we contacted offered to work on a no-win, no-fee basis, and said they would only take their cut, if they got you a refund. So it seems you've got nothing to lose, right? Wrong - after further discussion with some of the companies it transpired that they wanted some of their fees up front.
Helen Elrick paid Tucan Claims Limited £249.99 upfront to sort out her PPI compensation. After a year of waiting the bank finally paid out - sending Tucan a cheque for £1548. But Tucan didn't forward this on to Helen, instead they sent her a bill for their 10% fee ON TOP of the £250 she had already paid. Helen and her husband paid the 10% but despite this they have yet to receive any of their PPI refund.
So far this year the banks have already paid out £215million to people who were mis-sold PPI. But if you're planning to get your money back the words of the Financial Ombudsmen couldn't be clearer...Do it yourself.
BELMONT THORNTON
Belmont Thornton has not been able to view this Programme in advance.
We do not accept the calls evidence a breach of the rules --- claiming expertise is not objectionable and the full calls are fair claims to expertise, experience and resources.
GLADSTONE BROOKES
All Gladstone Brookes staff are made aware of the MOJ guidelines and are trained appropriately to ensure our regulatory compliance. We deem it essential that our compliance and customer service are of the highest standard. To ensure this, we have set up our systems to reduce the risk of those Regulations being breached and our service levels being reduced. For example, Gladstone Brookes employs a team of auditors who randomly review a selection of the inbound calls made to our Initial Vetting Team. In addition, we employ a team who audit the ongoing handling of our Clients' complaints. The findings from these audits are then fed back to the teams / individuals to ensure ongoing training is sufficient.
With regards to the calls made by Watchdog, we note that you have not sent us call recordings, complete transcripts or the date and time to enable us to retrieve the calls and analyse them fully.
We do not agree that Gladstone Brookes mis-sell our services to potential Clients, nor that the calls you highlight are representative of the service given to the vast majority of our Clients. All potential Clients contact Gladstone Brookes via an inbound call to our Initial Vetting Team (or use our on-line facility), as we do not engage in Cold Calling to generate Clients. The Initial Vetting Team will establish whether the Client has grounds to make a complaint and then explain the process and the service that will be provided to them. We do not believe that the isolated statements you have highlighted within this process could be deemed as rendering the service as a whole as mis-sold. However, as stated previously we will be using your feedback to ensure that we improve our service and compliance.
Based solely on the extracts that you have stated in your letter, we accept and regret that these calls potentially breach MOJ Regulations. As stated previously, Gladstone Brookes takes its compliance and customer service very seriously and it is disappointing that the systems we implemented to prevent breaches occurring have not been robust enough to prevent a drop in service levels on these occasions. We can assure you that this has been addressed internally.
Gladstone Brookes do not make verbal contracts with Clients as the initial call is followed up in writing. In the written contracts (which have been verified by the MOJ) we confirm:
a. The client can conduct the complaint themselves by approaching their Bank and the Financial Ombudsman Service free of charge.
b. Should they wish to cancel within 14 days they can do so with no charge.
We believe this supports our assertion that our service is not mis-sold, despite the calls that you have made.
Since March 2011, after consultation with the Ministry of Justice, Gladstone Brookes have not taken upfront fees from Clients.
Gladstone Brookes do not cold call for business. All of our Clients have chosen to contact us in response to our direct marketing, either on the telephone or via our website. In addition, we receive considerable volumes of repeat business (existing clients who want us to represent them with other PPI cases) and word of mouth recommendations (existing clients referring friends or family members) as testament to the good service that we provide.
To conclude, I would like to confirm that Gladstone Brookes welcome the current attempts by Watchdog to highlight the problems within the Claims Management Sector. We would like to reiterate that Gladstone Brookes take compliance and high service levels very seriously. We will continue to work via our auditing and training process to ensure that all Clients who contact us to assist them in bringing their complaints receive the service that they deserve.
On the case of Mr Abbott:
We have looked at the complaint by Mr Abbott and confirm that his bank rejected his compliant on 1st April 2010. We sent Mr Abbott his refund on 10th June 2010. This took longer than we would have wished. We would like to point out that we attempted to help Mr Abbott but were unable to do so as his bank were not regulated at the time of the sale. Under the terms of his agreement with us, we did not charge Mr Abbott for the work we had carried out and we refunded the up front fee that we charged at the time. Mr Abbott has not made any official complaint to Gladstone Brookes. If he had done so, we would have responded to his concerns.
PPI CLAIMLINE:
PPI Claimline has deep concerns about the accuracy and impartiality of Watchdog's investigation. We do not believe that Watchdog is accurately reflecting the conversations that its journalists had with PPI Claimline, nor the complete and detailed information that they received from PPI Claimline staff.
It would have been more appropriate for Watchdog to have devoted time to investigating the many thousands of people who are facing appalling treatment by banks when they try to pursue their claims, and whether regulators are properly doing their job in enforcing fair and speedy bank response to mis-selling claims. We are proud of the work that we have done in supporting people from right across the country to secure the compensation that they deserve when faced with such disgraceful treatment by banks.
TUCAN CLAIMS:
We are deeply concerned by the allegations which were put to us and since receiving your initial correspondence we have conducted a thorough investigation. Although we retain complete records of the calls which we receive we have been unable to trace those which you state were made on the 20th and 23rd May. We note from your correspondence that you will not supply copies of any call recordings held by you and as such we do not believe that we have been afforded an appropriate opportunity to investigate the allegations you have put to it in relation to those calls. Whilst we appreciate that you have provided short paraphrases of the alleged conversation we do not believe that this is sufficient information to enable us to provide a full response.
We confirm that we received a call on the 13th July. We were deeply disappointed that the level of service provided by our employee during this call fell short of the industry leading standards which it normally provides. The employee concerned has been removed from his normal role, disciplined in accordance with company procedure, and is currently undergoing retraining. Whilst the information provided by our employee during the call was totally unacceptable we believe that our clear and comprehensive customer documentation, along with our legally compliant business process, ensures that our customers do not enter into any contract unless they fully understand the service that is to be provided and the costs of that service. It is also important to note that had your researcher completed the process he would have spoken to a quality assurance department who would have checked his understanding of the service and resolved the matters you have identified.
We have made considerable investment in our infrastructure and systems to ensure that we operate compliantly. All of our employees are subjected to rigorous training and assessment prior to commencing their roles, and regularly undertake update and refresher training. Unlike some of our competitors we ensure that every prospective customer receives pre-contract information which clearly explains its service and the costs which are payable. We also believe that it is important to note that our charges are one of the lowest in the industry.
Since the business opened in 2010 it has grown considerably and now provides employment to 94 people. It has obtained compensation on behalf of consumers totalling £7.8 million and is currently progressing in excess of 14,000 claims on behalf of its clients. It undertakes 3.8 million calls per year to prospective clients and its monitoring of those activities have not revealed any pattern of non-compliance.
We are of course aware of the content of the Ministry of Justice Conduct of Authorised Persons Rules 2007 and strive to operate a fully compliant business. We do not suggest in our marketing that we are able to achieve a more favourable outcome than if consumers use the Financial Ombudsman Service. However we
do have substantial evidence of achieving higher levels of compensation on behalf of consumers than that which is offered to claimants as a result of claims made directly to financial institutions.
We also note that the suggestion by Mr Boorman of the Financial Ombudsman Service that the process of obtaining compensation is relatively straightforward and that consumers should act independently. In this regard we believe that it is important to note that although the banks have set aside in excess of £5 billion to pay compensation only a very small percentage of that has actually been paid out. Our experience is that most consumers do not know that they may be eligible and have often lost details of their policies.
The process of establishing whether a payment protection insurance policy exists can be complex and often requires more detailed correspondence with financial institutions; institutions who have repeatedly breached Financial Services Authority (FSA) guidance in dealing with complaints including during the Judicial Review process. Making a complaint to the Financial Ombudsman Service requires knowledge of who the claimant is claiming against and it is this barrier which prevents most consumers from acting independently. Our experience is also that many consumers either do not understand the Financial Ombudsman Service complaint form or are fearful of engaging in that process without support. We believe that the comments made by Mr Boorman are typical of a government agency which does not entirely understand the needs of vulnerable consumers. Therefore in the absence of Citizens Advice having sufficient capacity to support every potential claimant the need is fulfilled by the private sector.
We also believe that there is an element of convenience in using a claims management company and that consumers do not make a decision solely based upon cost. It is also questionable whether the awareness of the mis-selling of payment protection insurance would be as high as it is if claims management companies had not been so proactive in campaigning and challenging financial institutions. Had regulation of those institutions by the Financial Services Authority been effective the mis-selling would not have occurred.
We believe that honest and ethical claims management companies offer a real service to consumers and as we stated in our letter of the 7th September it welcomes any action by the Claims Management Regulator to deal with non-compliance. We were particularly disappointed to see in the Parliamentary Question tabled in the House of Lords on the 11th August that only 18 businesses in the year to March 2011 had their authorisation cancelled by the Regulator for non-compliance with the Rules despite previous publicity from the Ministry of Justice having referred to 349 authorisations being cancelled in the same period.
On Ms Helen Elrick:
The claims discussed within the report have now been settled, and Tucan Claims have advised that they are unable to comment any further.
WE FIGHT ANY CLAIM
We have never claimed that a client's claim could or would be more successful if they employ our services, as opposed to making a claim directly themselves.
In the absence of call recordings or transcripts to evidence your allegations, we do not accept that the guidelines were breached. Notwithstanding this, where any deviation from our required scripting is detected by our quality monitoring team, we will take appropriate steps to rectify the deviation with the individual(s) concerned.
Whilst we do act as a "middle man" in bringing consumer PPI complaints, we are able to add considerable knowledge and experience to the claims process on behalf of consumers, as well as saving the consumer the time involved in corresponding with the banks, hence we charge a reasonable fee for our service.
We note that you have not provided us with call recordings or transcripts and we have some doubt that these were the exact words used by our representative. The words you have quoted appear to have been taken out of context and simply mean that, while it may be relatively straightforward for an individual to initiate a claim for mis-sold PPI against a financial institution, there are often many tactics used by lenders to dispute or reject someone's claim at the first hurdle or to not deal with it at all. We have encountered numerous, well documented, instances where a lender will initially reply to a PPI complaint by stating that it can find no record of the existence of PPI at all, in order to reject a valid claim, only for further investigation by us to prove that PPI does exist after all.
If this is what the representative said [that only 10% of people who claim independently are successful, as opposed to 90% going through CMCs] then it is down to individual error. We previously used similar statistics in relation to the ratio of PPI complaints that the FOS were upholding in favour of consumers i.e. 9 out of 10 were being upheld, although this figure has since reduced.
Ministry of Justice rules do not prohibit the charging of up-front fees. The £245 upfront fee that we charge is to cover the initial process of reviewing a client's circumstances to establish the existence of PPI and the prospects for a successful claim. Our no-win no-fee policy states that should any claim we are dealing with for a client prove to be unsuccessful, we will fully refund all fees that have been paid (save only for a £10 non-refundable administration fee, as per our terms and conditions). This was highlighted in a letter that we wrote to Tony Boorman at the FOS in June 2011.
Please note that, whilst cold calling 'in person' is prohibited under Ministry of Justice
(MOJ) rules, other forms of cold calling (e.g. telephone, email or text) are permitted in accordance with the Direct Marketing Association's Code of Practice. Although we do periodically purchase opted-in data from third parties, all such data is warranted to us as having the client's prior consent to be contacted in connection with financial service related products and services and not specifically prospective claims for missold PPI.
On the case of Mary Munro
[Mrs Munro's case involved] circumstances beyond our control but clearly demonstrate the issues facing claimants when dealing with the banks and lenders trying to obtain redress for PPI mis-selling. We can appreciate Mrs Munro's frustration at these delays but we can assure her that we are working diligently to obtain a favourable outcome for her as soon as possible.
ISMART CONSUMER SOLUTIONS:
iSmart Consumer Solutions has successfully reclaimed mis-sold PPI on a genuine no win / no fee basis for thousands of customers. We provide a specialist service for the victims of PPI mis-selling who, for a variety of reasons, do not wish to make a claim directly for compensation.
We constantly strive to achieve the highest level of customer service possible and welcome feedback, positive or negative, from any source. iSmart is committed to assisting those people who do not wish to make their claim for mis-sold PPI direct to the financial institution.
MINISTRY OF JUSTICE:
A spokesperson for the Claims Management Regulator said:
"We have made it very clear to businesses that we take a zero tolerance approach to any malpractice or attempts to take advantage of consumers. Claims management companies should remain in no doubt that if they breach the rules they will be closed down.
"Consumers do not need to use a claims management firm to make a PPI claim. It can be simpler and cheaper to complain directly to the business that sold PPI to them. There is a range of consumer advice on the MoJ, FSA, FOS and FSCS and DirectGov websites. Consumers who do want to use a claims management company should shop around for the best deal for them and we have warned claims management companies they should not mislead potential clients."
On upfront fees:
"The vast majority of claims businesses that provide PPI claims services do not charge upfront fees (other than small admin fees). Most of them charge at the end and only if a claim is successful. There is therefore no need for consumers to pay large upfront fees. We have recently issued strong guidance to consumers making them aware of this, whilst suggesting that they shop around for a claims business. Consumers should never pay an advance fee, provide credit card details or agree a verbal contract without seeing full details of the offer in writing first."
Questions
1. Why are companies able to breach guidelines on a regular basis and still continue trading? What procedures does the Ministry of Justice have in place to ensure that companies registered with the Ministry of Justice do not breach the Code of Authorised Persons Rules?
"We have made it very clear to businesses that we take a zero tolerance approach to any malpractice or attempts to take advantage of consumers. CMCs should remain in no doubt that if they breach the rules they will be closed down. There will be no let up and we are planning a fresh surge against non compliant CMCs in the financial sector.
"Businesses must comply with the Conduct of Authorised Persons Rules 2007 as a condition of their authorisation. A range of enforcement actions are available to deal with breaches of the rules - ranging from informal action that can include written warnings to formal action which can include imposing conditions on their authorisation and suspension or cancellation of authorisation."
2. Have any companies had their Ministry of Justice registration rescinded as a result of breaching the Code of Authorised Persons Rules? If so, which companies, when and for what reason?
"Since regulation started in April 2007 479 CMCs have had their authorisation cancelled for non compliance with the rules. Details of CMC cancellations can be found on our website at https://www.claimsregulation.gov.uk/search.aspx?search=simple&business=&authID=§or=-1&county=-1&status=11 - although this does not give reasons for cancellations for individual CMCs (there is a specific procedure needed to do that and not feasible in time for this programme)."
5. What will be done by the Ministry of Justice now to ensure behaviour like this does not continue? Will the companies listed above be subject to investigation on the basis of the information we have uncovered?
"We have made it very clear to businesses that we take a zero tolerance approach to any malpractice or attempts to take advantage of consumers. CMCs should remain in no doubt that if they breach the rules they will be closed down.
"We recently conducted a number of audits of several claims management businesses operating in the PPI claims market. This resulted in compliance action to address the problems identified and the issuing of new guidance to all claims businesses on handling PPI claims appropriately.
"We also issued strong guidance advising consumers to shop around for a claims business, and warning that most claims firms do not charge upfront fees. Our advice to consumers on these two common concerns (upfront fees and contracts) is:
• Some CMCs will ask for up front fees of hundreds of pounds to handle PPI claims. Avoid them. Shop around, most CMCs charge at the end and only if claim is successful.
• Never say yes to a CMC until you have had full details of the service and fees. Never say yes on the phone - only agree to contract with CMCs in writing.
• Never pay an advance fee, provide credit card details, or agree a verbal contract without seeing the offer in writing first.
"We investigate all consumer complaints made against businesses and where a breach of the rules is identified, enforcement action is taken that can result in their authorisation being cancelled. "We will of course carefully consider the issues raised about these businesses.
ANDREW WIGMORE - POLICY DIRECTOR CLAIMS STANDARDS COUNCIL
"In response to your programme highlighting the activities of some claims management companies claiming compensation for consumers who have been mis-sold PPI, we would like to make it clear that while some companies present on-going issues that the Ministry of Justice and the Claims Standards Council (CSC) continue to monitor and police, there are many who have offered, and continue to offer, the consumer a valuable service that is transparent and ethical. The facts are that over 80% of claims currently lodged with the Financial Ombudsman Service (FOS) have originated from a claims management company or solicitor and in the vast majority of cases, claims management companies help the consumer receive the compensation they are entitled to.
It is important to recognise that often the consumer does not feel confident that the banks offer them the correct amount of compensation. Certain lenders at least have made claiming difficult. The process is not always easy, contrary to statements made by the FSA , the FOS, Which? and the banks themselves. In our experience many thousands of consumers find the process daunting and do not even understand whether or not they have been mis-sold PPI. (Many do not even realise they were sold PPI.) We fully support the many steps taken by claims management companies to alert consumers of the wide-scale mis-selling of these PPI policies by lenders. Further, there is no verification that offers of redress are either fair or correct, unless consumers use the service of knowledgeable companies, whether claims management companies or solicitors, to verify the figures. Frequently, offers are lower than consumers are entitled to and it is often only through the intervention of such companies, that consumers ultimately receive amended offers, reflecting the true redress they are entitled to.
PPI Claimline have helped the CSC to pioneer standards and protocols with the full co-operation of the Ministry of Justice and other stakeholders. They continue to separate the good from the bad companies and we urge consumers to check and see if a claims management company is a member of the CSC to give them added protection that the company they are dealing with operates to a certain standard.
Tony Boorman from the FOS, recognising that there are good companies offering claims management services to the consumer, called upon the CSC to improve standards - this is exactly what we have done. We consider it vital to provide consumers with informed choice when deciding whether to use a third party to act on their behalf.
We welcome Watchdog's investigation and will continue to support the consumer groups in highlighting misleading malpractice in those companies not wishing to offer an ethical and transparent service."
PPI Claims: beware of losing out a second time...