The efforts to force legal firms offering no win no fee’ to reveal hidden fees are in place. Under a planned crackdown, City regulators will require the claims firms to reveal to consumers their fees upfront as well as inform them of free options. Now when you visit the no win no fee solicitors remember if this programme follows through, you are supposed to be informed of the hidden fees as well as the free alternatives available.
The new rules are expected to be in play just 4 months prior to the deadline of payment protection insurance (PPI) claims in August 2019. This will be just in time for an anticipated rush of consumers seeking mis-sold policies redress claims. This programme followed the revelation by the Financial Conduct Authority (FCA) that found claims firms are taking half of the compensation fees for claimants without making it clear.
You can imagine how big that is and the impact it has on recompense. Should that happen to you, there is no doubt you would be left with a meagre compensation that is insufficient, even after saving on legal expenses. FCA. says that the term no win no fee is widely misunderstood by individuals. Most claimants would easily be lured into the payment agreement, then end up losing half as much of their compensation.
As per the draft plans published a few months ago by the regulator, claims firms offering and advertising “no win no fee” legal services will be forced to disclose their fees in adverts. It should be clear to consumers that the legal firms are not offering a free service.
The no win no fee solicitors firms must also provide short summary documents with the important information to clients. These should contain details such as fee estimates, an overview of the provided services as well as a task which the clients will have to undertake themselves.
Should a free ombudsman scheme or a statutory compensation scheme be in place in regards to the claim, the claims firms must have this explained clearly to the customers in the summary document. A regulator study found that 67% of customers who enlisted the services of a claims firm in the past 3 years to make a financial services claim would not have done it alone.
Under the crackdown, the Claims Management Regulator, part of the Ministry of Justice will step down and the FCA will take over. FCA Chief Executive, Andrew Bailey believes that a well-functioning claims management department can assist to provide Justice and redress to people who have suffered harm. Still and all, the market doesn’t always work as it is supposed to since poor conduct still exists throughout the sector.
Bailey further said that the FCA wants the CMC to be trusted providers of top quality, good-value services that are truly helpful to consumers. FCA has a key element of their approach is to make sure consumers are protected and treated fairly as well. According to the Chief Executive, the proposals outlined in the crackdown is integral in achieving the FCA’s aim.