From today the Legal Ombudsman – which resolves complaints about services provided by lawyers -will accept complaints about claims management companies (CMCs).
Which? has campaigned for several years to ensure that consumer complaints about CMCs are dealt with and that CMCs are made accountable for their actions.
CMCs currently manage a large percentage of the payment protection insurance (PPI) claims lodged each year on behalf of customers, which means the PPI scandal is big business for claims firms.
Find out how to re-claim PPI for free, without using a claims management company.
Clamping down on claims companies
Claims companies are designed to help people manage their financial claims, a process that can involve lots of form filling and which can sometimes take months or years to resolve.
However, the industry’s reputation has suffered at the hands of a number of consumer gripes caused by misleading information on costs, delays in progressing claims, and poor communication.
CMCs also charge consumers a fee to make a claim, sometimes keeping a large proportion of the eventual payout which would have otherwise gone to the individual had they made the claim themselves.
Thousands of complaints
Around 9,000 complaints were made about claims firms last year but until now ripped off consumers have been unable to seek help.
The Legal Ombudsman, which can accept complaints about any claims firm regulated in England and Wales, now has powers to order compensation, make firms reimburse costs or to provide other forms of suitable redress.
It also hopes to improve the industry’s reputation by monitoring recurring problems and working with firms and the Claims Management Regulator to address underlying causes of complaint.
Which? campaigning pays off
Which? executive director Richard Lloyd said: ‘This is a positive change for consumers. We have campaigned for years for the Legal Ombudsman to handle complaints about Claims Management Companies (CMCs) so that consumers who are treated badly will get access to independent dispute resolution and compensation.
‘CMCs have a poor reputation, especially over rip-off PPI claims, so this will tip the scales back in favour of consumers, drive up standards and help clean up the claims industry.’