Of the 99 people questioned, two out of three successful claimants said they had received value for money, even though the firms are typically charging a fee of between 20% and 30% of the claims recovered. Just under half of those whose claims were successful and a quarter of those who were unsuccessful would recommend using an endowment claim company.
Three-quarters of those questioned said they went to an endowment claims company because they read about it or heard about it from an independent source. Only one in ten were prompted by the claims company itself. Those who have used the claim companies say they understood that it was a no win – no fee system, but the fee level was not always made clear.
However, the survey showed there was evidence endowment claims companies are selective and choose to act for individuals where there is a good chance of success. There was also criticism companies ceased to communicate with clients if the companies felt the claim was unlikely to be successful.
John Howard, chairman of the Financial Services Consumer Panel said: “Some consumers seem quite prepared to pay part of their compensation to a claims firm, especially when the alternative is to receive no compensation at all, because they do not have the time or the confidence to pursue a claim themselves. It is not clear that the claim firms save consumers that much time and there was dissatisfaction with some aspects of the service provided by some firms – not giving details about the fees up front, and poor service in telling clients when the claim was not successful. This needs to be considered as the Government starts to regulate this arena through the Department of Constitutional Affairs."
