Having cashed in on payment protection insurance, claims handling firms have switched their attention to your roof
The heading on a national newspaper advert from a claims management company (CMC) – “Mis-sold solar water heating?” – is the latest move by an industry of more than 3,000 claims handling firms looking for the next new thing after hoovering up huge profits from payment protection insurance (PPI) mis-selling.
The ad, from Cheshire-based Consumer Reclaim, continues: “If you think you’ve been sold a Solar Hot Water Heating System by the exaggeration of its benefits, you could be entitled to claim back the full cost.”
Readers will remember that many high-selling-pressure firms were named and shamed here four or so years back for claiming far higher benefits from hot-water panels on a roof than were justified. And they charged consumers, who wanted to be “green”, up to three times the fair cost of around £4,500 per installation.
Consumer Reclaim states it is “currently handling claims” against a number of companies, including Smart Energy (UK), Ultimate Energy, Simplee Solar, Solar Direct UK, Solar Home Energy, Solsave and Solarsol UK. They all sold systems, and have now gone bust.
Guardian Money asked Consumer Reclaim, which is “regulated by the Ministry of Justice in respect of claims management activities” (registration number CRM23523), how anyone could sue a company that was dissolved or in liquidation and so has no funds, however good a case there might be for a payback for inappropriate selling.
It has not responded to our inquries. But taking the “30-second claim test” on its website – it actually takes five seconds – showed that potential claimants need to have paid via a loan, probably with a credit card. Those who paid cash are told they have no case. Consumer Reclaim believes it can take action, on a “no-win, no-fee” basis, against banks and other lenders under Section 75 of the Consumer Credit Act, the legal framework for compensation if a holiday or other firm goes bust and you lose £100 or more.
The large credit card companies we contacted say they have so far not seen or heard of any claims, although they concede that some in the credit industry may have. But they say Section 75 is more about a failure to deliver rather than over-pricing. One bank that did not wish to be quoted said: “If we paid for all exaggerated prices, we would probably end up giving nearly everyone who ever had a home improvement their money back.”
The Ministry of Justice says claims handlers are generally regulated either for personal injury or financial product mis-selling work. There is no suggestion that credit card and other loan companies mis-sold solar panel products.
The MoJ says firms can use their registration on adverts even if the activity promoted is not one covered by the registration.
Consumer Reclaim is part of Consumer Reclaim Ltd, whose sole director is 51-year-old Roger Anthony Pritchard. According to Companies House records, Consumer Reclaim Ltd has failed to send in annual returns due on 12 May and is subject to a “proposal to strike off”. This could cause difficulties for anyone who has a contract with them.
Guardian Money found one other company offering redress for solar panel purchasers – Assist Reclaim – with a similar website. It has one director, again a Roger Anthony Pritchard, of Hale, Cheshire. In October 2006, the Financial Services Authority issued a notice against Stockport-based First Legal Services, where Pritchard was also a director. The watchdog cancelled its permission to deal in FSA-regulated activities. It said: “The FSA is not satisfied that you are a fit and proper person, having regard to all the circumstances, including the need to ensure that your business is conducted soundly and properly.” First Legal Services went into compulsory liquidation in 2009 after the Official Receiver intervened.
Although there are 3,000 claims companies, a freedom of information request shows the MoJ has just 58 staff to manage claims companies, mainly agency or contract workers, an average of one person for each 52 firms.
In the year to 31 March, 409 claims companies – about one in eight – were warned, suspended or had their registration cancelled, according to the MoJ annual report this month .
Head of claims management regulation Kevin Rousell said: “The mass mis-selling of payment protection insurance has seen a surge in the number of companies operating in the financial claims management sector. Poor practice is rife among some claims management companies, which are falling over each other to get claimants’ business. To help tackle this we have set up a specialist team to root out the poor practices used by some companies presenting claims for mis-sold PPI. Our investigators are using effective enforcement to stop bad practice and improve the industry once and for all.”
He added: “Other on-going tasks include working with regulators and industry bodies to clamp down on unsolicited text messaging, identifying businesses that take upfront fees and misleading marketing.”
Unsolicited texts sent to me include “We have been trying to contact you regarding your accident, we now have details of how much you are due.” Although the firm is unidentified, there was no attempt to contact me – and I have had no accident (other than bashing my thumb with a hammer). Another said: “There is £2,351.23 waiting in your name for the mis-selling of PPI on your loans and credit cards. To get this ASAP, reply PPi [sic] to this message NOW.” As someone who campaigned against PPI in these pages, I can confidently say I have never taken it out.
Hertfordshire-based independent financial adviser (IFA) Alan Lakey of Highclere Financial Services is glad to hear that the MoJ is getting tougher with PPI claims, but wishes the new zeal was extended to other financial claims.
“I don’t want people to be mis-sold – the bad reputation affects IFAs who are innocent,” he says. “But in common with many other small advice firms, I’ve had nonsense letters from claims managers on behalf of clients who do not even know they are complaining. Some have been hoodwinked into giving a claims manager details of their IFA. The CMC then lists everything including the kitchen sink against me. I’ve been accused of mis-selling an Isa when it was a pension, and vice versa. I write back – this costs time and money – to say they can’t accuse me of mis-selling or not advising properly or not discussing relative risk because they don’t know.
“They then escalate it to the Financial Ombudsman Service, which currently costs me £500 a case after the first three a year (due to go up to 25 soon) but nothing for them, even though they can collect up to 30% of any compensation. I also have more expenses in dealing with the case in detail. I know of firms including big life companies would rather pay up £1,000 to £3,000 just to get rid of the aggravation; in some cases their professional liability insurers tell them to do this as it’s cheaper. It’s true. These phoney claims cost me around £2,500 on average if you count my own time.”
The ombudsman service says it has seen some inquiries about solar panels but has yet to give a formal ruling.
It adds: “Consumers can come to the ombudsman if they are unhappy with the results of a failed section 75 claim in relation to this subject. As we discussed, it’s not black and white (it rarely is) but that’s where we step in anyway.
“Consumers don’t need to use claims managers to bring a complaint about section 75 – or any financial product. We will ask the consumer to explain what has gone wrong in their own words. You don’t need to be a financial expert to use the service.”
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