Claim Management Companies
Safety advice: We strongly recommend that all our customers avoid Claim Management Companies. Recent indicators show that many CMCs in the UK are not serving their customers’ best interests.
- Claim Management Companies will not try and understand your specific case. They only provide standard complaint templates that are too generic to provide any real information about your situation.
- The no-win no-fee basis is expensive for you but very profitable for the CMC.
- Claim Management Companies can only get you a part of the interest back, never the funded capital of your loan.
- Claim Management Companies will charge you 20%-40% of what you may get in cashback.
- If you do not like how your loan is handled, you should always speak to your lender directly. We are here for you, should you encounter any issues with your loan.
Your safety counts! Don’t let CMCs make money at your expense. Recently, a number of claim management companies (“CMCs”) have begun to target customers of payday loan companies, such as Cashfloat who is an FCA authorised lender. Typically, these companies are run by the same people who were previously active in marketing PPI complaints and have now switched to payday loans as the PPI saga comes to an end.
One Claim Management Company has recently had radio adverts banned by the ASA for breaching BCAP Code rules 3.1 (Misleading advertising) and 3.12 (Exaggeration).
Be careful of no-win no-fee companies Many CMCs advertise aggressively to encourage people who have taken out payday loans to make complaints via their company. They also offer to work on a no-win no-fee basis when they apply for a refund on your behalf. Of course, they will make it look like an easy way to land an unexpected windfall “Mr X complained through us and received £8,000 in compensation.” But who is Mr X, and how did he get such a large sum in compensation?
It is interesting to note that CMC’s almost never provide their actual success rate or what the average payout per complaint is.
Work directly with the FCA authorised lender
At Cashfloat, we try to help our customers and ensure that you receive a professional and sympathetic service at all times. If you do fall into financial difficulty, we are always willing to discuss it with you and offer a helping hand. For this reason, we do not receive many complaints.
However, should our service not meet the high standards to which you are entitled, we would urge you to contact us directly, and not via a CMC, for the following reasons:
- Complaints made via a CMC have less credibility, as often the company is just ‘trying it on’.
- CMC’s do not have the time or incentive to actually get to know you and your financial circumstances. Therefore, their complaint is not based on genuine knowledge of your situation.
- CMC’s invariably use standard template letters for complaints, often containing irrelevant or incorrect information.
- CMC’s will typically charge you 20% – 40% plus VAT of any refund that you receive. Whereas, if you come to us directly you will get 100% of any compensation payment that we make to you.
- Complaining directly through the lender rather than through a CMC can save you a lot of money. Take the examples below:
|Representative payday loan of £300
over 3 months
|Cash in hand:|
|Representative short term loan of £500
over 3 months
|Cash in hand:|
Claim Management companies are usually misleading
Another point which CMC’s often fail to make clear is the expected outcome of any complaint. They lead customers to believe that, if the Financial Ombudsman upholds their complaint, the existing balance will be written off completely, and the history of the loan will be removed from their credit file.
For a customer with a large balance, this can seem like a tempting offer. Just fill out a quick form, and they will make sure you do not have to pay back any of your current loans!!
If only life was so simple… In reality, what actually happens is as follows:
- If you make a complaint against our company, our dedicated in-house complaints management team will first deal with it. They will consider whether they believe the complaint is correct, and if so whether the customer should be offered redress.
In some areas, such as affordability, very few complaints are upheld by us. This is because our unique affordability assessment is based on up-to-date information received from reputable third parties, including banks, credit reference agencies and statistical data, as well as the information on your monthly income and expenditure that you have to complete as part of our application process.
- In the event that the customer does not agree with our decision, they can make a quick and free appeal to the Financial Ombudsman using this link . If you contact a Claim Management Company at this point, they will be following the exact same steps and just be charging you for it. If you insist on using a CMC, first check their legitimacy here.
- At the Financial Ombudsman, an adjudicator will invite both parties to set out their case, and will then offer a provisional judgment.
- If either of the parties do not accept the judgment, it proceeds to an Ombudsman. Again, both parties will be asked to make any further comments before the Ombudsman considers it further. At this point, the Ombudsman will make a final decision, which is binding on both parties.
The entire process will usually take between 6 to 12 weeks, depending on the workload of the Ombudsman dealing with the case, and the amount of information provided by the parties.
What is important to know is that, even if a complaint is upheld by the Ombudsman, they will only ever ask that the lender removes the loan interest. The loan capital balance will still need to be repaid, in all circumstances.
We are always disappointed when a customer feels that they have been treated unfairly and makes a complaint to us. However, we hope the above information helps you to understand how to make an effective complaint and what outcome you can realistically expect.