The investigation carried out by consumer group Which? involved mystery shopping 25 CMCs posing as individuals who thought they may have been mis-sold payment protection insurance.
Most of the companies called didn’t follow the rules set out by the Ministry of Justice and Which? identified problems with every company investigated.
Two thirds failed to advise the caller about the Financial Ombudsman Service, despite being required to do so. One company said: “If the bank rejects your claim, there’s nothing you can do”.
Six repeatedly told the caller they had more chance of success or would receive more compensation using a CMC than by submitting a claim independently.
WeFightAnyClaim told a caller, “You have over 90% chance of claiming it through us or under a 10% chance of doing it by yourself”. There’s no proof that this is true and CMCs are prohibited from making such claims.
Three of the firms, Aims Review, WeFightAnyClaim and Tucan Claims, charged upfront fees and some asked callers for payment over the phone.
In a separate survey half of people who have used a CMC told Which? they were cold called.
Which? and MoneySavingExpert have said they would like to see both these practices banned altogether as they can lead to a pressured situation where people can’t or don’t, go away and consider their options.
Richard Lloyd, executive director of Which? said: “Claims management companies must clean up their act.
“All too often consumers are being misled about their chances of success and how much they'll have to pay, the last thing people need if they've already fallen victim to the PPI mis-selling scandal.
“We look forward to the Ministry of Justice taking swift enforcement action where appropriate based on the findings of our investigation.”
Martin Lewis, creator of MoneySavingExpert, added: “Even if the claims handling companies all played it by the book, with mis-sold Payment Protection Insurance payouts of £3,000 to £5,000 now being commonplace, the price charged is far too high.
“Reclaiming is easy for many, just a case of making a call or writing a letter. Yet claims handlers often charge over 30% which for many means losing over £1,000 of their payout and for most, it's just not worth using these firms.”
