Endowment claims companies in the UK are taking an average of between 20% and 30% of the compensation that they win for mortgage mis-selling victims, according to research by the Financial Services Consumer Panel.
The research revealed, however, that despite the high fees, two out of three of the successful claimants questioned said they had received value for money. In addition, approximately half of the consumers with successful claims and a quarter of those with unsuccessful claims said they would recommend using an endowment claim company.
John Howard, chairman of the Financial Services Consumer Panel (FSCP), said: Consumers seem 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 confidence to pursue a claim.
The FSCP research revealed that increasing numbers of consumers are turning to claims companies because of the perceived complexity of the process, when actually the companies are doing little more than the claimant could do themselves, and may not be saving them much time in the process.
According to the research, of those who were unhappy with the service offered by endowment claim companies, many complained of unclear fee details and poor service. Furthermore, it emerged that the companies typically only take on the cases that they think will be successful, abruptly ending correspondence with others.
Mr Howard claimed that the research shows little evidence as to the actual benefits of endowment claims companies, and stated: This needs to be considered as the (UK) government starts to regulate this arena through the Department of Constitutional Affairs.