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Mortgages - Using a claims firm?
Research published by the Financial Services Consumer Panel shows that consumers use mortgage endowment claims companies to save time and to help them through what they see as a complex process.
Of the 99 people questioned, two out of three successful claimants said they had received value for money, even though the firms are typically charging a fee of between 20% and 30% of the claims recovered.
In addition, just under half of those whose claims were successful and a quarter of those who were unsuccessful, would definitely recommend using an endowment claim company.
Three quarters of those questioned said they went to an endowment claims company because they read about it or heard about it from an independent source - only one in ten were prompted by the claims company itself. Those who have used the claim companies say they understood that it was a no win-no fee system, but the fee level wasn't always made clear.
Not surprisingly, there was evidence that endowment claims companies are selective and choose to act for individuals where there is a good chance of success. There was also criticism that companies ceased to communicate with clients if the companies felt the claim was unlikely to be successful.
John Howard, Chairman of the Financial Services Consumer Panel, makes the point that some consumers seem quite prepared to pay part of their compensation to a claims firm, especially when the alternative is to receive no compensation at all, because they don't have the time or the confidence to pursue a claim themselves.
But he adds that it isn't clear that the claim firms save consumers that much time. Meanwhile, there was dissatisfaction with some aspects of the service provided by some firms, such as not giving details about the fees up front. "This needs to be considered as the Government starts to regulate this arena through the Department of Constitutional Affairs," says Howard.
Moneyextra.com recommends you take independent financial advice before acting on any article
Back2006-12-06 10:29:03 © Moneyextra.com
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