It's quite likely that you've been cold-called sometime recently, by a claims management company (CMC), offering to act as your representative for reclaiming mis-sold PPI (Payment Protection Insurance).
The payment protection insurance scandal has led to a massive surge in the number of CMC's, as they look to get a nice thick slice of your PPI pie. The sheer number of people mis-sold PPI in the UK, has meant that CMC's can actually employ staff to randomly call people in order to drum up business.
How do Claims Management Companies work?
Claims management companies basically act as an intermediary between you and the company on which you are making a legal claim. Not exclusively interested in PPI, they also deal with claims across a wide number of issues such as, personal injury and pay discrimination. They essentially behave like a legal firm; taking on your case and confronting the relevant party with your claim.
What does it cost?
In order to fight your case, most CMC's will specify a percentage of your winnings as their total fee. This may seem like an attractive prospect for some as it offers a no risk solution; if the claims company lose the case, you simply don't pay them anything. Bear in mind though that if a claims company is willing to take on your case, there is very little chance of your claim being dismissed, and the cost to you may be significant. Generally speaking, CMC's charge a percentage of about 25%, although more competition in the market place has forced that percentage to come down. If you're thinking of using a CMC for convenience, you should still shop around to to check for the best rates, as well as the type of reputation each company has earned so far.
The best firms will charge no upfront fee, and as little as 10-15% in commission. Some firms alter their commission rate based on the expected value of the claim – it you win more money, the rate may go down. Alternatively, if you win less, you may end up paying more than initially expected.
Why do I need to use a Claims Management Company?
You don't really. If you're looking to reclaim your PPI we have a wealth of guides and information to help you do just that. In some cases, such as this, the process of claiming is easy so using a CMC is expensive and unnecessary.
In some cases though you can benefit from the support they offer, and it lifts the pressure of the case directly from you. It will also take a lot of the burden out of the paperwork involved with having an active role.
Also, if you are in some doubt as to whether your claim is valid or not, using a claims management company can offer a great way to tentatively find out. You can essentially find one that charges no consultation fee, then meet with them to find out if they'd be willing to take on your case. If they are then you can consider that you have good grounds for a claim, and think about possible alternative ways to process your own claim. If you're claiming for something which has affected a number of people, such as PPI, it's highly likely that you'll be able to find some resources online to help you do it yourself. A little research on Google can throw up some vital links to support forums where similar people are making, or have made claims, as well as letter templates to guide you through the actual process.