An article in Money Marketing was published in March 2021 with the headline “CMCs fail on 73% of FOS complaints”.
It said statistics from the Financial Ombudsman (FOS) covering the period April 2018 to February 2021 showed:
Only 27 per cent of claims brought by ‘ambulance chasers’ went the way of the claimant…
those seeking compensation for misselling would have a better chance if they went it alone, as they win some 36 per cent of cases when brought directly to the FOS.
Those numbers weren’t wrong – they came from a freedom of Information request to FOS.
But they only tell part of the story and the headline as a result is misleading.
Uphold numbers for affordability complaints
I asked FOS for the recent uphold figures for complaints by product, broken down into claims brought through a Claims Management Company (CMC) and those brought directly by the customer.
Here are the FOS numbers from 1 March 2020 to 1 March 2021:
| via CMC | direct | |
|---|---|---|
| payday loans | 69% | 62% |
| installment loans | 81% | 77% |
| guarantor loans | 84% | 82% |
| doorstep loans | 82% | 83% |
| All FOS cases | 27% | 35% |
Why are these numbers so different?
The last line in the table above is pretty much the same as the numbers in the article. But the differences between products are dramatic!
PPI uphold rates have been declining significantly over the last couple of years. The FOS product statistics for Oct-Dec 2020 show:
- the PPI uphold rate had fallen to only 9%. One of the reasons the FCA decided to put a time limit on PPI claims is that many of them are about mis-selling that occurred so long ago there is little or no evidence remaining about the sale;
- the non-PPI uphold rate was 39%.
Claims companies account for a very large percentage of the PPI cases brought to FOS. So the low PPI uphold rate has been reducing the overall CMC uphold rate faster than it brings down the uphold rate for consumers going directly to FOS.
This doesn’t mean that CMCs are doing a worse job than a customer could do on their own – it just means that CMCs have been concentrating on the harder to win PPI cases.
No reason to use a CMC
Most of the affordability complaint numbers in the table above are much the same for CMCs and non-CMCs.
There was only a significant difference for payday loans, the CMC uphold rate was 69%, against 62% for customers applying themselves.
I sometimes see people taking a payday loan case to FOS when they have only had one or two small loans. These are very unlikely to be won, which I point out. But sometimes people still want to try, which is their right, arguing that their situation was so bad no loan should have been given.
So I think what is happening here is that CMCs are better at rejecting some of these cases with very little chance of being won, which makes their uphold rate look better.
My conclusions from the detailed FOS numbers are:
- it is the details of your case that determine whether you are likely to win it at FOS;
- it doesn’t make any difference to your chance of success if you make your FOS claim on your own or through a CMC.
Do CMCs have a useful role?
So what is the point of CMCs, if they don’t improve your chance of winning your FOS case and they take a chunk of any refund or compensation you get?
To people who don’t know where to begin with these complaints, the CMCs are providing a service.
They also pay for advertising that publicises when a complaint can be made. Of course to the banks getting PPI claims and to bad credit lenders getting affordability complaints, this looks like “ambulance chasing”, as the Money Marketing article called them. But if you don’t know you can complain about something, it’s useful to be told!
How to do it yourself with no CMC
All the information you need to make an affordability complaint is on this website. There are separate pages for the different types of debt with template letters for each:
- large loans;
- payday loans;
- guarantor loans;
- doorstep loans;
- credit cards and catalogues;
- overdrafts:
- car finance.
If your complaint is about insurance or another consumer issue, then your local Citizens Advice may be able to help you.
Mike_p says
I used a claims company for my first payday loan complaint. They presented themselves as giving a personal service with expertise in the area, in reality they were nothing but an email forwarding service and the only difference they made was slowing down the correspondence between me and the lender/FOS. I did the rest of my complaints directly, but as you say I might not have known it was possible if I hadn’t seen th claim company advert.
Beth McLeish says
Good Morning, not sure if this is the right place to put this, but is there any guidance currently with regards to putting a claim in for the Vauxhall Emissions claims? I have a claims company chasing me to sign up, but they want 50% of any successful claim, which appears scandalous to me, so was wondering if there are any plans for templates for this type of claim?
Thanks in advance for your help.
Sara (Debt Camel) says
Not an area I know anything about.
Leigh Day are a well-respected firm of solicitors who are “only” charging 35% including VAT: https://www.leighday.co.uk/our-services/group-claims/vehicle-emissions/
Mike Hunt says
‘Only’ – ludicrous advertisement on behalf on LD. shame on the Camel.
Dan says
bang out of order, the ‘only’ is clearly highlighted. DC and Sara have changed thousands of lives for the better, please show more respect.
Sara (Debt Camel) says
MSE have now published a guide to this which anyone interested should read: https://www.moneysavingexpert.com/travel/diesel-emissions-group-legal-claims/
Scoobie says
I used a claims company for my PPI as didn’t realise I could do it myself. This was pre-2012. Paid 20% plus VAT….!!!
Which was a lot of money for sending a few letters…blame myself for not doing the research!
craig says
Interesting figures. I thought the claims companies uphold rate would have been a lot lower because of the scattergun approach.
Perhaps having someone that knows the process inside out and has handled 1,000’s of similar complaints is worth something. I know when I got to my 7th or 8th personal complaint with the FOS I was more knowledgeable than in my first complaint, and I was able to draw on knowledge gained from the earlier complaints to raise points that tipped the latter complaints in my favour.
Sara (Debt Camel) says
I think that may matter with unusual cases. But the vast majority of affordability and PPI complaints are “just send a standard email to the lender then a standard complaint to FOS”. No-one at the CMC looks at them and decides what to do or how to carefully argue the case.
Jo says
Hi, I made a complaint over a year ago to the ombudsman relating to a loan with TM Advances. The case has been assigned to an adjudicator however when I called for an update yesterday I was told that all unaffordable lending complaints are on hold with them. They are reviewing the process on how they investigate these complaints to eliminate delays when a business disagrees with their decision. They don’t know how long these cases will be om hold for and I was told it could take months. Does anyone know anything about this?
ed says
Is there any way of knowing which CMCs are better? Only a couple are on trustpilot and there seems to be nothing out there saying which ones actually take the time to do more than send standard templates. Maybe if this existed it would make CMCs work better
Sara (Debt Camel) says
Yes but they all send standard templates. Some do some more checking than others up front, so they are more likely to reject the no hope cases. But after that they all do the same.
ed says
Don’t some take more time finding out individual circumstances relevant to the claim that might not be obvious at first? I find it hard to believe they all literally just use a template. As someone said earlier, they were better on their 7th/8th complaint to the fos than the 1st, so there must be things you can do better if you are someone who knows what they are doing, maximising chances of success.
Sara (Debt Camel) says
An individual gets better but that is because they know the situation of their case. A claims company can’t afford to have people looking at individual cases, they would never make any money doing that, they have to just use a computer algorithm.