According to data from the Financial Services Compensation Scheme, the majority of people who sought PPI refunds did so by using PPI claims companies. Based on an analysis made with the Scheme from 2008 to 2011, some three-fourths of claims made during the period were done through a management firm. The FSCS is a UK compensation fund of last resort for customers who have claims against authorized financial firms that are unable to address them because they are in default or have stopped operating.
People who use PPI management firms, however, make many common mistakes that end up compromising their claims or costing them money. Here are some of these mistakes that you absolutely must avoid when choosing a claims management company.
- Not asking how much they charge first before signing up with the service provider. There are many people who have asked a management company to handle their claims and ended up having to pay a big nonrefundable amount out of pocket with nothing to show for it since their case was unsuccessful. Look for a company that handles cases on a no-win, no-fee basis since they are likely to work harder for you. Also avoid companies that have hidden fees that can greatly bloat what you actually have to pay.
- Hiring a company that charges too much. The standard rate for reputable management companies is 25% of the refund they won for you plus VAT. If they charge more, or have added fees that will boost the final charges beyond this amount, avoid using them. Use a PPI claims calculator to estimate how much you stand to get so you’ll know how much the management professional should be charging you.
- Using a company that is not licensed. All reputable PPI management companies have a license from the Ministry of Justice. You can confirm if they are licensed by asking them for their reference number and then checking it out on the Ministry of Justice website,
- Working with a company that does not use qualified staff to handle your case. Check on the credentials of any staff assigned to your claim as well as their experience in handling PPI cases.