Recently, on LinkedIn I had a "link to me" request from someone who appears in my inbox pretty often. It is a person who has some money business and advertises him self as someone who can take you through the frightening world of PPI claims. I have blocked him.
A few years ago, a court case was won that exposed the cheat that was the PPI industry. Basically, financial institutions of all types from big banks to credit-card companies and loan companies like the AA were proved to be selling very expensive insurance schemes covering loan and credit repayments that were, mostly, completely unnecessary. On the direct advice of the companies these policies were being sold to the public left right and centre and the companies were making fortunes from them.
The result of these schemes meant that at the very least, the true cost of the loans were vastly more than had been advertised and in many cases, the high monthly premiums coupled with crippling interest rates being applied ON TOP of the insurance premium meant that many people were unable to pay off their loans for years and years.
So, following the ruling, people now had the opportunity of getting the ombudsman to step in and force companies to cough up. If they found in your favour, then the company would have to refund the FULL amount of all the premiums, they would have to refund ALL the interest charged extra on the loan amount, compound, for the entire length of the loan and would have to pay a further 8% as compensation. I have one very close friend who received £45,000 back and another who has received £11,000.
Into this mess sprang a pile of opportunistic, nasty, lying little rogues who advertised everywhere that they would handle your claim for you.
- Doing the claim is really, really hard, they claimed
- If you do it yourself, it will take you hours and hours of time and you will make mistakes and lose
- We will negotiate on your behalf with our years of experience to get you a bigger payment.
And then the other bit:
We will take up to thirty percent of the money you get for doing all that hard work.
So, was this a good deal?
NO - IT WAS AND IS A COMPLETE RIP OFF!
Got the idea yet?
My close friend, when he did his, it was soon after the ruling and things were more complicated and rather slow. This is everything he had to do to claim money back from a credit card company.
1. He wrote to the credit card company saying he wanted his money back - he downloaded a form from the website and managed to fill some of it in (they said just fill in what he could)
2. They wrote to him refusing saying he had no case. They enclosed the address for the ombudsman and told him to resend the claim there.
3. He sent the photocopy of the original form off to the ombudsman who wrote back saying he was on the bottom of the pile and be patient.
4. He did ABSOLUTELY NOTHING for a year and one day someone called him from the Ombudsman's office and asked him two or three questions about his employment at the time of taking out the credit card. As a result of this phone call they said they were upholding his claim.
5. A couple of months later a cheque for £45,000 turned up.
Although this had taken a long time to sort out, he had actually only spent about an hour working on it, and trust me, he is a very nice but not the brightest button in the box. However, for interest, when he was talking to the person from the Ombudsman's office, he asked about the claims companies.
"Oh," said the person, "They just fill in the form and send it to us."
"Don't they negotiate with the companies?"
"Oh, no. No point in doing that - we are the ones that have to adjudicate anyway."
"So how does it work?"
"Exactly the same as you have done, except they post the letters. You still have to fill out the form for them."
So, if he had gone through a claims company they would have charged him up to FIFTEEN THOUSAND POUNDS for licking the back of a stamp.
A few years later, and another friend was making a claim and had been hijacked by a claims company. Thankfully he told me and I told him about the other friend. So, he told the claims company to take a running jump (they phones him about twenty times trying to get him to change his mind), downloaded the forms from the internet and sent them off to the loan company. This time, the company did not do the automatic rejection, but just sent a cheque a few weeks later using the system set out by the Ombudsman. It was fast and cost half an hour of time and a stamp. Voila!
Q. Will I get more money using a claims company?
A. No, you will get less as they will rip you off and take your money.
Q. Will it be faster through a claims company?
Q. Have the claims company some clever leverage over the insurance companies?
A. No. If they tell you they have (and some do) they are lying their arses off.
Q. Do they "negotiate" with the companies on my behalf?
A. No. Again, if they tell you they do, they are lying. They use exactly the same system as the Ombudsman.
Q. Will they charge more than the Ombudsman?
A. Oh, YES! The Ombudsman does not charge a single penny and makes no profit from telling the companies to comply.
Q. Can claims companies force insurance providers to comply?
A. No, only the ombudsman has the authority to force compliance through the court ruling.
Q. Will I feel better after using a Claims company?
A. Only momentarily until you talk to your neighbour who didn't use one and realise you have been totally and completely ripped off and left feeling like a fool.
The only question remaining is why are these malicious, scamming companies with their slimy cold call tactics, unsolicited spam text messages and their cheap lying adverts aloud to exist?
So, if you are yet to claim your PPI back and a claim company phones you up, you make sure you make their day really awful and you shout down the phone what miserable little cheating scammers they are.