The modern Brit is fine-tuned to identify a scam. With cowboy traders, rogue sellers and credit card fraudsters aplenty, we’ve become particularly good at honing in on an old-fashioned con. But our sensitivity to this kind of threat comes at a price, and that price is avoidance of genuine and legitimate opportunity.
You’ve all seen the adverts, and perhaps even received the phone calls. They claim you could be liable to obtain compensation from some lender or service provider due to issues such as mis-selling of finances. PPI used to be a common one, but with the deadline for those claims now passed, it’s more likely to be regarding mortgages or flight delays.
It sounds too good to be true, of course. Somebody, somewhere owes you money you didn’t know about, and to investigate this, the claims company just needs some details from you, and they can get to work — often for free.
Why Isn’t This a Scam?
Outright, this sounds like a con. We’re all too aware that you don’t get something from nothing, so the idea you could potentially be owed thousands of pounds without knowing it, and that the path to claiming comes easy and at no cost to you, sounds quite frankly, insane.
But this isn’t a scam.
The fact of the matter is, claims companies exist and continue to exist because there are lots of claims for financial compensation available. Examples include for flight delays, mortgage mis-selling, pension mis-selling, excess credit card fees and claims for undisclosed commission on money borrowing.
We see examples of these types of claims in the news all the time. In 2018, it was found hundreds of thousands of borrowers were owed compensation for mis-selling of credit-only mortgages, and who could forget the massive PPI scandal that saw £36 billion in total refunds paid out to consumers across the country?
The reason you might not be aware of claims available to you is that those liable to pay up don’t often advertise their existence. If you aren’t a legal expert combing through your payments and contracts, you are probably going to be none-the-wiser.
Further to the security of this type of claims activity, the Legal Ombudsman monitors and regulates the industry, as does the Claims Management Regulator, a government organisation set up by the Ministry of Justice. Malpractice and dodgy-dealings are reported on and investigated. Claims management companies cannot just say and do whatever they like. As recently as July 2019, an advert was banned for misleading customers. As with any other legitimate industry, some rules and regulations must apply.
How Do Claims Companies Work?
Okay — so the industry is regulated, and the claims do exist, but how does that make this process legitimate? It still sounds too good to be true. The truth is that it isn’t too good to be true. Once you understand how the system works, it makes total sense.
There is a lot of suspicion around the idea of no-win, no-fee — that a claims company will work for you, and only take money if the claim is successful. How can this be affordable for them?
Well, it works like this:
A claims management company gets permission from you to use your details to investigate a claim for money you may be owed. Perhaps you were delayed on a long haul flight or were sold a mortgage during a period of known mis-selling.
They will then contact the vendor and investigate the possibility of a legitimate claim. They automate this process using claims management software, which means they can handle huge amounts of claims at once, checking for their viability. If their initial investigations show there is a viable claim, they will follow up on the case and manage your claim, in return for a commission payment on the claim value once it is settled — usually around 20%.
This is how claims companies make their money. They take a percentage of the claim you are owed, but only once it’s paid. This means there’s no need for you to spend money, and there is no risk to them wasting time, as their initial checks quickly help establish if there is actually money for them to make. If the claim isn’t viable, they simply won’t follow it.
The claims management software they use ensures they don’t invest time and money unnecessarily, so they can offer a stable business model that benefits you and them.
While most businesses will offer no-win, no-fee, not all payment terms for claims management companies are the same, so it is important to know what they are before you agree. Understand that these are legitimate opportunities — but also there are risk factors involved if you don’t choose the right business to manage your claim.
Make Sure You Don’t Get Taken for a Ride
Now, while there is true legitimacy to claims management companies, and compensation claims themselves, it cannot be said that there are not some unscrupulous individuals out there trying to take advantage of the system — just as with any form of money-making.
The PPI deadline ended in August of 2019, yet some scammers are still cold-calling to say you are owed money. The trick to making a proper claim, and avoiding dodgy companies, is always to do your research first, and be wary of those that contact you out of the blue claiming to have information on a case you have not reported to them.
We suggest you look at reviews of companies and check financial forums for references. There are many, many trustworthy businesses out there doing good and reliable work, helping people obtain life-changing amounts of compensation. It is also important to read a contract relating to financial compensation in full and to ask questions if you don’t understand terms. Any genuine business will be happy to explain any of their terms clearly, and provide written evidence of this explanation.
It really is not too good to be true. Find the right claims management company, and you may be in for a big financial windfall.
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