Before using a claims firm
Using a claims management company is a legitimate choice, and some people prefer it. But it is a choice, not a requirement, and the cost comes out of your compensation. Here is what to establish before you sign.
On this page
What a claims firm actually does
A claims management company gathers your information, submits the complaint on your behalf, corresponds with the business, and escalates to an ombudsman if needed. For some people that administrative help is worth paying for, particularly with several agreements or a complicated history.
What it cannot do is give you access to a process you did not already have, or guarantee an outcome. The same complaint, submitted by you, goes to the same place and is assessed on the same evidence.
What you can do yourself for free
- Ask a lender for copies of your agreement, at no cost.
- Make a subject access request for the data a business holds on you, free.
- Submit a complaint directly, free.
- Escalate to the Financial Ombudsman Service, free.
Our complaints guide includes a letter template that covers what a submission needs.
How the fees really work
Most claims firms work on a success fee: a percentage of whatever you recover. Two things catch people out.
1. VAT is usually on top
A "30% fee" is often 30% plus VAT. On a £2,000 award that is meaningfully more than £600 once VAT is added. Ask for the total, in pounds, on a worked example.
2. The fee may apply to more than you expect
If the redress includes a refund of payments you already made, plus interest, the fee may be calculated on the whole sum, not just the "profit" element. Ask exactly what the percentage is applied to.
| Ask this | Why it matters |
|---|---|
| What is the percentage, and is VAT included or added? | The headline figure is often not the real one |
| What is the fee on a £1,000 and a £5,000 outcome? | Turns a percentage into a number you can weigh |
| Is the fee charged on the total redress or part of it? | Changes the amount substantially |
| Is there any charge if the claim fails? | "No win no fee" should mean no fee |
| Is there a charge if I cancel later? | Exit fees exist and can be significant |
| What happens if the business pays me directly? | You may still owe the fee |
The letter of authority
A letter of authority lets the firm act for you. These are frequently much broader than customers realise.
- Scope. Does it cover one named lender, or every finance agreement you have ever held?
- Duration. Does it end when the case ends, or continue indefinitely?
- Data. What can they request, and who else can they share it with?
- Marketing. Are you separately agreeing to be contacted about other products?
Ask for a copy of exactly what you signed, and keep it. If you are asked to sign on a phone screen in a hurry, that is a reason to slow down, not speed up.
The ten-question checklist
- Is the firm authorised for regulated claims management, and can I verify it on the Financial Services Register myself?
- What is the total fee, including VAT, expressed in pounds on a worked example?
- What exactly is the percentage applied to?
- Which specific agreements or lenders does the authority cover?
- How long does the authority last, and how do I end it?
- Is there any charge for cancelling, and when does that start?
- Who will actually handle my case, and how do I contact them?
- What happens if the lender pays me directly?
- Will my data be passed to any other company, and for what?
- Am I already represented by someone else for the same claim?
A firm that answers all ten clearly and in writing is behaving well. Evasiveness on fees is the single most useful warning sign.
Cancelling
You generally have a cancellation period after signing up to a distance contract, and rights to end the agreement later. What matters is:
- How to cancel: in writing, and to which address or email.
- Whether any work already done is chargeable.
- Whether the firm will confirm in writing that the authority is withdrawn, and notify the lender.
If you have signed with more than one firm for the same claim, tell both. Duplicate representation causes delay and disputes over fees.
Red flags
- Contact out of the blue by call, text or social media claiming you are owed a specific sum.
- Pressure to decide immediately, or claims that a deadline expires "today".
- Any request for an upfront payment before work is done.
- Requests for banking passwords, card PINs or one-time codes. No legitimate firm needs these.
- Suggestions that you cannot complain for free, or that this is your "only chance".
- No written fee information, or a refusal to put figures in writing.
Complaining about a claims firm
If a regulated claims management company treats you unfairly, complain to the firm first. If you are not satisfied, the Claims Management Ombudsman can consider it, free of charge. The same evidence-first approach in our complaints guide applies.
General information only, not legal or financial advice. We are not paid by claims firms and do not recommend individual companies.