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Claims management | 21
regarding advertising, marketing and conduct of
authorised persons. The Ministry of Justice
have been inundated with new applications from
claims management companies, seeking to make
the most of this business opportunity.
Companies that do not abide by the Ministry of
Justice rules and regulations risk their annual
licence being revoked and the company ceasing
to trade. Therefore, consumers need to be careful
when choosing the company to trust with their
business.
esr
Revenue stream
Andr
Claims management companies have recognised
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that offering a service to the public or via
Intermediaries may allow access to a large data-
base of customers, most of whom are likely to
have some credit agreements. Most households
these days have loans, credit cards, HP agree-
ments, and cars on finance etc. all of which can
be checked for errors. This association can work
in the favour of everyone involved.
Financial Advisers, in particular mortgage
advisers, are currently suffering a downturn in
business due to the significant reduction in the
mortgage market and the number of products
available and the inability of their customers to
be approved for a mortgage. Claims manage-
ment could provide an alternative revenue
stream for the adviser until the market starts to
return and also in the longer term. In addition,
if the adviser can relieve their customer of any
monthly outgoings, they can then use that addi-
tional monthly amount to sell protection, critical
illness cover, income protection etc. which are
products that might otherwise be unobtainable and tell their customers that they can pay for the consumer laws. With a new agreement in place,
due to an increasingly tightening household service on that actual credit card. Some compa- the lender is then protected against a future
budget. nies ask the customer to stop paying the monthly claim by that customer.
amount to the lender and that payment becomes
Legal rights the fee for services rendered. However, time will Service
We believe that if the consumer has been charged tell. Each adviser needs to decide whether the services
incorrectly for a loan or credit card then the con- As the industry is still relatively new, and the of a claims management company is something
sumer should be able to exercise their legal rights fact that cases may take 3-9 months to be con- that is part of the service offered to his or her
to have the situation rectified. Ultimately, it is cluded, successful cases are now beginning to clients or risk the possibility that someone else
the Judge’s decision as to whether or not a credit come out of the legal process. Consumers comes along and takes that client away. In these
agreement is written off, and if any compensa- should not just look at the fees charged but the tough times, losing clients to a competitor is not
tion is awarded. Each case is different and the service standard offered by the company. Some the best outcome as well as the opportunity of
degree of how unfair the credit agreement is will companies state that they cannot provide audit any referral business that may come from a satis-
vary. For example, some audits of credit agree- results for up to 60 days or more. By the time fied client in the future.
ments reveal minimal discrepancies; whereas the audit results are presented, the consumer has Financial Advisers may find themselves in a
others unearth numerous breaches of the terms paid at least 2 months more payments on their very difficult and awkward situation; their loyalty
and possible overcharging of the client by thou- credit agreement which could be £400-£600 or divided between their clients and the lenders,
sands of pounds. The solicitor dealing with the more. Therefore, it may be worth paying a bit with the need to survive financially. The current
case will decide whether or not it is strong more to receive good service which in the long economic crisis has led to a record number of
enough to proceed to the claims process. term may cost the consumer less. enquiries for debt counselling, something that
Irrespective of the outcome of the case, our cus- The future for claims management companies advisers can assist their clients with or refer them
tomers are protected against any liability for legal seems to be good – this appears to be a recession onto specialist debt management firms. If offer-
costs and disbursements by accepting an insur- proof industry and a service that will probably ing claims management services in conjunction
ance policy which is offered and funded by the appeal to many of the population with credit with debt management advice helps clients to
Law firm. agreements whether through necessity or not. survive and the advisers to be paid - in the
There are differing views on what is actually Lenders wise to the practises of claims manage- absence of assistance from the lenders who owe
achievable regarding these claims. Some com- ment companies may choose to contact cus- much to the advisers for bringing in
panies suggest that they can get all the customer’s tomers and offer a deal on the outstanding business...why not? It is a dog eat dog world,
payments made to date returned including inter- balances in return for the customer entering into and if the shoe was on the other foot, what do
est. Some companies offer to clear credit cards new terms and conditions under the current you think the lenders would do?
www.mortgageintroducer.com March 2009 Mortgage Introducer
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