Ever complained to a business? Doing this could cost you £1,000s

Ever complained to a business? Doing this could cost you £1,000s The FCA is so concerned about CMCs that it’s issued repeated warnings about poor practice and is taking action against many of the worst offenders What’s the main reason why you didn’t complain about poor service from a business? Was it too much hassle? Did you not have enough time? Do you think there’s no point because the odds are stacked against you? Or is it just too complicated and you’d rather not make a fuss? All of these reasons and more are perfectly understandable. Life is busy and complex, and we often put off complaining because we run out of time or other things sneak up the priority list. So is it worth paying another company to make your complaint for you? Businesses that do this are known as claims management companies, or CMCs. They don’t have a great reputation, but millions of people use them. In fact, chances are you’ve been cold called or messaged by a claims manager about mis-sold PPI in the past, or about car finance right now. While some businesses do provide a diligent and thorough service for their clients, far too many claims managers are just in it to make a quick cash grab, while doing the minimum of work. The financial services regulation, the Financial Conduct Authority (FCA) is so concerned about CMCs that it’s issued repeated warnings about poor practice and is taking action against many of the worst offenders. But not all third parties who help you with complaints are in it for the money. Some people may be your friends or family, or representatives from fantastic organisations like Citizens Advice, or a charity. In this article, I’ll take a look at the pros and cons of asking someone else to make a complaint for you. Am I allowed to ask someone to make a complaint on my behalf? In the vast majority of circumstances, it’s possible for you to appoint someone else to act on your behalf to make a complaint. This might be a friend or a family member. Alternatively a member of a support service, like a charity or a consumer organisation could help you draft up a complaint or provide support. All you need to do is confirm you are who you say you are, and tell the business or organisation that someone else is representing you or acting on your behalf. You may have to fill in a form to do this, but it should be straightforward. You can even give permission for a firm to speak to another person about your case too. However, you can also pay someone to make a complaint for you. In the past, you may have asked a solicitor to make a complaint on your behalf, particularly if the matter involved complex legal issues. These days it’s more common to use a claims management firm. The problem with paying a third party to bring a complaint is it introduces a two-tier system of justice, where those who pay could potentially get better outcomes than those who do not. This is why the government introduced ombudsman services and dispute resolution schemes. Ombudsman services and alternative dispute resolution schemes (ADR) An ombudsman service is an independent and impartial alternative to the courts. In the UK, our first ombudsman was the Parliamentary Ombudsman back in 1967. Since then, there are ombudsmen for all kinds of business sectors, though some have more powers than others. Ombudsman can help you sort out problems with everything from energy to financial matters. You can find a full list of ombudsman services here. Alternative dispute resolution schemes work in a similar way to ombudsman schemes. However, they may not have the same legal or regulatory powers. They are (almost) always free to use and can help you mediate a complaint resolution. Some are better than others and ADR schemes need to be less business-focused in some instances (watch this space!) But they are still a free alternative to the courts if you want to take things further. Ombudsman and ADR schemes are vitally important because they are designed to be free and accessible to all. You do not need to use a third party to make a complaint because the schemes are designed to interact with you in plain, simple English, no matter how complex the dispute. You should never need to use a paid-for service, like a claims manager, to use an ombudsman or ADR scheme, though you can do so if you chose. The ombudsman schemes I speak to make it clear that paying someone to make a complaint makes absolutely no difference to the outcome either. In fact, sometimes it can make it worse, if a CMC issues a "cut and paste" complaint on your behalf. What are claims management companies? Claims management companies initially appeared offering a paired down version of legal services They initially offered to help you make complaints about things like personal injury, financial mis-selling, housing issues and other legal matters, often for a percentage of the compensation, flat fee or for a "no win, no fee" charge. However, all that changed when complaints about Payment Protection Insurance (PPI) exploded in to the mainstream in 2005. PPI was the biggest mis-selling financial scandal in modern times with around 62 million policies sold. When the compensation deadline finally passed in August 2019, an extraordinary £36billion had been paid out. This is known as a mass claims issue. Claims management companies realised quite early on in the process that they could submit claims on behalf of clients en masse, and collect between 20% to 45% and more per claim. This was ultimately capped at a rate of 20% - but only in 2018. That means that claims management companies walked away with billions in compensation fees. It’s important to note that this money isn’t compensation for poor service. It’s the actual loss experienced by the customer as a result of the mis-selling. So a firm that charged 40% would leave each customer with only 60% of the money they had actually lost. Are claims management companies worth using? The whole point of paying for a third party to make a complaint on your behalf is if they are able to provide a service that you can’t do by yourself. This might be because the situation you are complaining about is too complicated, or because it involves complex legal arguments. Claims management companies have come in for lots of criticism in the past because in many cases they didn’t do very much at all to justify their fees. In the case of PPI, the CMCs asked their customers to fill in forms that were effectively exactly the same as the Financial Ombudsman and industry template for making a PPI claim. In other words, you could have filled out more or less the same form yourself and walked away with 100% of the compensation if you won. Detailed analysis by the ombudsman and FCA found that using a claims management company made absolutely no difference to a positive outcome for their customers. In many cases, using a CMC actually worked against customers, because a few claims managers didn’t bother to personalise the complaints, missing out vital information that could have resulted in a case being upheld. Ultimately, it was the aggressive advertising campaigns utilised by claims managers that led to their downfall. With some firms cold-calling people ten or more times a day, misleading people about their services and vastly overcharging, the regulator called time on sharp practices and capped fees. However, with billions potentially up for grabs with car finance claims, the CMCs are back with a vengeance and are up to their old tricks. You don’t need to use them to make a claim. Just get your credit files to see if old credit agreements are on their, and use some of the free online apps that help you track your old finance agreements. Don’t pay though! Why don’t people make their own complaints? We are all busy and sometimes, despite our best intentions, we run out of time to follow up on problems or complain about poor service. When I speak to readers, there’s often a sense that "the moment has passed" when I ask why they haven’t pursued a complaint. In addition, we have surprisingly entrenched attitudes to complaining, from "not wanting to make a fuss" to "finding the process intimidating". Here’s a list of the most commonly cited reasons given for not pursing complaints: and my reasons why you should. Not having the time to make a complaint. - It shouldn’t take too long to actually make a complaint. All you need is around 15 to 20 minutes to note down what went wrong, a short timeline of events and what you want to sort the complaint out. You can flesh this out later if need be. Frustration with how complex the process of making a complaint is. - I fully understand how you feel. If you follow the basic template above, all you need is a phone number or email address so you can make/send the complaint. I appreciate that’s also tricky, but I have tips for that too… Not being able to contact the business. - I just spent 30 minutes trying to contact a broadband provider as an experiment recently. I failed to find a way to do this on their website. But if you type the name of the brand you want to contact and ‘complaints number/email’ in to a search drive, chances are you’ll find the information you need. The business resolves the immediate problem but not the wider issues. - As long as you say the words "formal complaint" any regulated business should respond in writing. So just chase them up as ask when your letter is coming. Not being told how to take matters further. - Regulated business sectors are obliged to tell you about their ombudsman or ADR schemes, but far, far too many neglect to do this. Remember you can easily do this yourself. Most complaints have a maximum time limit of 8 weeks for a business to resolve a complaint. Once they are over that, just cut and paste your complaint to the ombudsman or ADR scheme. Disillusion with how a previous case was handled. - This is one of the most common reasons cited for not taking things further. I’d say don’t get mad: get even. Just because you experienced poor service before, don’t be put off. Every complaint that’s resisted or escalated to a higher level is a reminder to the business and any regulator they have that it’s doing things wrong. Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist