In August 2012, Mrs M instructed a claims management company (CMC) to pursue a claim for mis-sold Payment Protection Insurance (PPI) with her bank.
Mrs M signed the CMC’s terms and conditions and a letter of authority and the CMC sent the claim to the bank the same month.
In November 2012, the bank advised the parties that they were not upholding Mrs M’s claim as they did not believe the PPI policy had been mis-sold.
The CMC sent Mrs M a letter to confirm this. The CMC asked Mrs M to provide further evidence for the relevant account if she believed this to be wrong.
Mrs M did not contact the CMC again and no further action was taken in respect of the claim by the CMC.
In November 2014, the bank wrote to Mrs M and the CMC to advise that they had conducted a further review of the claim and that they did not make the right decision the first time. A full refund was made to Mrs M and the CMC subsequently issued their invoice in December 2014 for £1233.
Mrs M complained that the CMC were not entitled to their fee as she had not had any contact with the CMC since November 2012. Mrs M also complained that the company had failed to provide her with an invoice. Mrs M was seeking a waiver of the full fees payable in the case.
The Legal Ombudsman’s investigation found that:
- Following receipt of the letter from the CMC in November 2012 advising that the bank had rejected her claim, Mrs M disengaged from the process.
- The CMC should have explained Mrs M’s options more clearly in their November letter. The investigator found that further and clearer information could have been provided setting out her options and the consequences of her inaction.
- However, there was no evidence that either party had cancelled or concluded the contract at any time. The CMC had initiated the claim with Mrs M’s bank as per their terms and conditions and had the bank upheld the claim in 2012, the CMCs fees would have been payable at that time. There was no evidence that the CMCs position had changed when the bank reviewed the claim in November 2014.
- The CMC provided evidence that they had sent the invoice to Mrs M. Whilst Mrs M stated that she had not received this, the CMC could not be held responsible for any failure in the postal system. There was no evidence that the CMC did not send the invoice and deliberately fabricated it at a later dated as was suggested by Mrs M.
The Legal Ombudsman determined that the full fees claimed by the CMC were payable.
Learning points for CMCs:
This case highlights to CMCs, the importance of:
- Providing clear information to their customers about the next steps and particularly what happens when a customer disengages from the process.
- Ensuring that complete file records are kept with details of every contact with a customer, including emails and call notes, where calls are not recorded. The Legal Ombudsman is an evidence based organisation and this attention to detail may prove invaluable if the complaint is later referred to us.