Mrs C asked a claims management company (CMC) to look in to a mis-sold Packaged Bank Account (PBA) in February 2015. The CMC complained to the bank on behalf of Mrs C in March.
In May, the bank wrote to say that they were going to need more time to investigate the complaint. They sent a questionnaire to Mrs C and the CMC, and asked for more information.
In June, the CMC wrote to Mrs C and asked her to complete the questionnaire. The CMC were waiting for Mrs C to send this back to progress the case further. Mrs C never returned the questionnaire. Instead, she spoke to the bank directly and returned the questionnaire to them.
In July, the bank notified the CMC and Mrs C that the complaint had been upheld, with a pay out of over £3,000 to Mrs C.
The CMC invoiced Mrs C for a £1,100 success fee. Mrs C complained to the CMC, stating that she had dealt with the bank directly and had completed the paperwork that had led to a successful claim. Mrs C said the company’s fee of £1,100 was unjustified based on the work they had completed and brought her complaint to the Legal Ombudsman.
Our investigation found that the CMC had provided a reasonable service, we found that:
- The CMC’s contract said Mrs C needed to deal promptly with requests for authority, information, documents or further instructions that may be required.
- The contract also said Mrs C should inform the CMC of any issues such as direct contact from the bank.
Mrs C had entered into a contract with the CMC to represent her in a PBA claim. The CMC had passed the questionnaire on to Mrs C to complete and Mrs C failed to do so. Instead Mrs C decided to complete the paperwork and send it directly to the bank, without notifying the CMC. The CMC were unable to progress the claim without this.
The bank made the situation more confusing for Mrs C by contacting her directly, since she had asked the CMC to represent her. She did complete the questionnaire. However, this did not mean the contract with the CMC was invalid.
Following the investigation Mrs C agreed that the contract was clear and understood that the fee was a percentage of the pay-out and not based on the work completed. Mrs C agreed to pay the CMC their £1,100 success fee.
Learning points for CMCs:
- Inform customers that banks may contact them directly, but also remind them they can ask for your assistance and that they should keep you informed of any progress.
- Include contractual terms that encourage customers to cooperate with your requests for information. For example, you acknowledge and agree:
- To deal promptly with requests for authority, information, documents or further instructions.
- To inform us of any relevant matters affecting the claim such as direct contact from your Loan or Credit Card Company.
Learning points for consumers:
- Banks may contact you directly. However, if you have entered into a contract with a CMC then you should keep the CMC informed of any contact or progress you make with the bank. The CMC should help with any work required to progress the claim.
- Once you have signed a contract with a CMC you have a 14 day cooling off period to cancel any contract you have with them. If you cancel after this stage, there may be cancellation fees. Read the terms and conditions of the contract you have signed and make sure you understand them.