The Legal Ombudsman has revealed that the vast majority of the complaints it has received about claims management companies (CMC) are in relation to financial product claims.
The Ombudsman began accepting complaints from the public about CMCs in January of this year. It has released a report detailing the volume and nature of the complaints in the first six months of 2015 and has said that 94% of complaints were about CMCs dealing with mis-sold Payment Protection Insurance (PPI), mis-sold mortgages, investments and interest rate swaps. PPI, made up 88% of the complaints.
The Ombudsman also said that was contacted almost 9,000 times from January to June, and average of 1,500 contacts a month. It accepted 648 complaints for investigation and resolved 478 of them. It has also found that CMCs actually make claims more complicated in many instances due to unjustified fees, delays, and poor advice.
Almost half (40%) of the disputes in the first half of the year were about costs such as unjustified fees, a failure to refund upfront fees, or because of contractual disputes. Around a quarter (23%) were about delays in progressing claims or a failure to progress cases properly at all. Failures to provide adequate advice or keep customers informed were also key causes of complaints. The average financial remedy ordered was around £650.
The Legal Ombudsman’s head of CMCs, Simon Tunnicliffe, said: “We are pleased to have been able to help all those people who have contacted us so far. This report highlights the benefits of having a dispute resolution scheme in place to mitigate against the consequences of poor service.”