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BBC investigation finds claims management firm misleading customers
Monday 15th February 2010An investigation by the BBC Radio 4’s Money Box has uncovered misleading and unacceptable behaviour by sales staff at a claims management firm.
Recorded conversations with the company Beneficial Claims showed that sales advisers were telling potential customers that there was no risk to their credit rating if they tried to get their credit cards and loans written off, when in fact there is.
Claims handlers such as Beneficial Claims say they can use mistakes in credit agreements to get unsecured debts declared “unenforceable”, however the sector has attracted a huge amount of controversy for using misleading statements in their advertising, as well as charging large upfront fees.
For instance, staff at Beneficial Claims told undercover reporters in a telephone conversation: “Our success rates are through the roof at the moment, across the board, we’ve got about a 93% success rate.”
However, when pressed by the undercover reporter, staff members refused to give actual figures about the number of customers who had managed to get their debts deemed unenforceable.
Upfront fees for Beneficial Claims start at £245, but they can be up to £500 with some claims management firms.
Commenting on the findings of the investigation, Kevin Roussell, the head of claims management regulation at the Ministry of Justice, said: “No one certainly now should be suggesting that your credit rating cannot be affected - it can. And where we pick it up, we instruct the business to change their practice; and if they don't, we can take formal enforcement action against them.”
The chief executive of Beneficial Claims, Keith Chorlton, has defended his company, saying: “As a claims company, we give the consumer an opportunity to get what he is entitled to.”
However, Mr Chorlton is something of an infamous figure in the business world. He was given a 10 year ban from being a company director in March 2000 for diverting £460,000 from an insolvent dating agency into his own personal accounts and failing to pay creditors.
Exceptions have been granted to allow him to head up various financial services companies, such as the loan broker Yes Loans, which Radio 4’s Moneybox states has received over 1,000 complaints since 2004, about misleading statements and upfront fees.
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