Case study 2

Case study 2

The case:

Miss B signed up with a claims management company (CMC) in January 2015. She felt she had been mis-sold Payment Protection Insurance (PPI) on two credit cards. The credit card company had been sold to another business and she asked the CMC to help.

After signing up with the CMC, Miss B suffered a personal loss and no longer wished to continue with the claim. She felt the company were contacting her too much at a difficult time and at the end of May 2015 cancelled the contract in writing.

The CMC did not update their system to reflect this cancellation and in June they received a letter from the credit card company to confirm that the claim had been upheld and an award was due to Miss B. Miss B had not been made aware of this offer and the CMC invoiced her for a success fee of £1,300.

The CMC called and emailed Miss B to ask for payment in June, July and August. Miss B found this upsetting as she had cancelled her contract.

The contract Miss B signed said that if the contract was cancelled outside a 14 day cooling off period ‘a reasonable fee based on the work [the company] have completed’ would be charged. It did not say anything about what would happen if the credit card provider made an offer once a customer cancelled their contract.

Miss B made a complaint directly to the CMC. The CMC responded in August saying that their Terms of Business stated that if an offer was received within 14 days of cancellation, a full fee would be charged. Miss B wrote back to the CMC saying she did not think this was in the contract she had signed.

In October, a review from the company decided the claim had progressed in line with their Terms of Business, and so it was reasonable that the full fee was charged. Miss B was not satisfied with this and brought her complaint to us.

The Legal Ombudsman’s investigation found that there had been poor service and that the CMC:

  • Did not correctly apply their terms and conditions about cancellation;
  • Charged a success fee on a claim when a cancellation invoice should have been sent.

The CMC agreed that they had not used their terms and conditions correctly and agreed to amend their invoice to charge £165 for the work they had completed up to the point of cancellation. This was a reduction of around £1,100. The CMC also said that they would look to change their terms and conditions to make their position clearer in the future.

Miss B was satisfied with this as a resolution to her complaint.

Learning points for CMCs:

  • Terms and Conditions should be regularly updated to current company policy
  • Customer comments on a complaint response can provide an opportunity to check your work, and help to resolve complaints before they come to the Legal Ombudsman.