Claiming services are a growing component of the UL litigation industry. Some services are opaque about the use of lawyers (to the frustration of some lawyers) but some include solicitors. and some do extensive advertising. Some do good work and some others are not so good. The claiming services industry is garnering more attention these days because of credit insurance claiming ("PPI claiming') in the UK. This new Financial Times article covers the topic at a broad level - some excerpts are below. Other articles also cover smaller picture points, such as ways to claim without using a claiming service. The BBC provides here a broad picture of PPI claiming - some say it will result in payouts of £ 10 - 20 billion.
Three take aways? Today, litigation is an industry all over the world, and not just in the US. Second, claiming services will continue to increase for so long as defendants do not pay agree to pay out quickly and completely through automatic payment without claims having to be filed, or through simple structures easily accessible to claimants, such as a well run and "fair" trust fund. Another take away is that it is expensive and time consuming to clean up after large scale problems. Some might think more time and attention should be paid to avoiding the problems.
The FT excerpts are as follows, and the article include numerous links:
“Claims management companies are seen as pariahs and banks have somehow managed to paint themselves as worthy institutions,” says Anthony Sultan, chairman of the Claims Standards Council’s financial services group, which represents the industry. “But, if banks had played fair in the first place, then there wouldn’t be a claims management business.”
About 1,000 financial CMCs are licensed by the Ministry of Justice, which reports that the sector’s annual turnover rose by two-thirds in the year to March 2012 to £313m.
The companies have grown out of a sector that previously concentrated on personal injury claims.
One of the largest firms, Cheshire-based Gladstone Brookes – which is owned by 32-year-old Lisa O’Neill – reclaimed PPI premiums worth £118m in the first 10 months of 2012. Based on its stated fee of 25 per cent, this suggests it has made in the region of £29m this year.
And as the number of PPI mis-selling cases has grown, so have the claims firms.
Until a few months ago, Empire Claims was based on the fifth floor of Davina House, an office block in north London filled with cramped rooms and stained carpets.
The company, founded in 2007, moved to larger premises in Kent at the start of the year as its workforce expanded.
ISmart, set up in 2007 by three former employees of a cash-and-carry chain in their late 20s, has nearly tripled its workforce in the past year.
The Northampton-based business has reclaimed £160m in PPI so far, suggesting its cut is near £40m.
Paul Fakley, managing director and a former marketing chief at RBS Insurance, says the market for PPI could be worth £50bn. “If the banks write to customers who they think were mis-sold policies as they are supposed to, then current estimates could be the tip of the iceberg,” he said.
But the industry’s success has attracted criticism.
Lloyds Banking Group has contacted the Financial Ombudsman Service to ask whether CMCs should shoulder the £850 cost of each claim that turns out to be erroneous.
The bank recently announced an extra £1bn provision for PPI, taking its expected bill to £5.3bn.
However, it says that about 40 per cent of the claims it receives from CMCs – which account for half of all it receives – are either duplicates or from customers who did not have a PPI policy with the bank.