There's an old saying that if it sounds too good to be true, it probably is! But does this apply to the mushrooming Claims Management Industry, with so many companies springing up with the prospect of gaining a write off of your debts, or secure compensation for you by claiming that your credit agreements are unenforceable? Like any industry, or advice generally, there are good and bad players in the market and it is very important that enough research is carried out before signing up to a Claims Management company.
Like most things in life, be careful! Over recent weeks there have been many high profile cases where the Office of Fair Trading (OFT) has closed down a number of high profile operators where there has been little or no evidence of success against fees paid to them in advance.
This is likely to be a trend we will see for some time.
Most of these businesses charge quite large up front fees for each agreement they review, but give no guarantee that they will be successful in challenging these agreements.
Keep in mind that in most cases, you will not get your money back if your claim is unsuccessful.
Here are some thoughts: •Research the company, •Discuss their track record, •Obtain case studies of actual successes •Understand how they generate their fees and what this covers •What is their policy for refunds? •Get a feel for their approach - over confident, promising the earth? Or do they come across as careful, balanced and realistic? An important matter to keep in mind is that lenders tend not to be stupid! Many, if not all, will have dedicated teams designing loan agreements whose wording meets the requirements of the relevant legislation, and it will be rare to find a credit agreement that does not meet the legal requirements under the Consumer Credit Act 1974, meaning these are not easy to challenge as unenforceable.
Beware of those who promise a 'knock out blow', as there is very little chance of universally applicable 'get out' clauses! National Money Helpline has been contacted by many people this year who have had poor experiences of Claims Management companies who have failed to deliver any positive results, resulting in loss of money that the individual could ill afford to lose.
Usually, contact with Claims Management companies arises when individuals are concerned about their debts where repayments are, or have, become no longer affordable.
Christian Seanor, one of the advisers at National Money Helpline, comments that "many such callers acknowledge that worries about covering debt repayments led them to explore the possibility of having the debts written off, with many clutching at straws to ease their circumstances.
" It may be that the better route to address such situations is to discuss your debt worries with a debt solutions specialist, who will ensure they fully understand your financial and personal circumstances before tailoring a solution that deals with your debts in a managed way, whilst gaining the co operation of the lenders.
Complaints about Claims Management Companies: The Ministry of Justice is the regulator for claims management companies.
They can take action against companies who break the rules: •Authorised companies should not cold call you, or pressurise you into taking up their offer.
•You should be given written information on the costs before you agree a contract with them.
•There should be a 'cooling off' period of 14 days to allow you to change your mind if you so wish.
•The company should have a properly documented complaints policy.
If you have a complaint about a claims management company, you can write to: Claims Management Regulation Monitoring and Compliance Unit 57 - 60 High Street Burton upon Trent Staffordshire DE14 1JS