Research has revealed that just one in ten mortgage mis-selling cases brought by claims management firms are upheld by the Financial Ombudsman Service (FOS).
A report by the Daily Mail said that claims management firms are “duping” homeowners into paying typical upfront fees of around £500 in the mistaken belief that there is a good chance of winning compensation.
It said that cold-calling claims management companies are targeting homeowners sold self-cert mortgages, a mortgage they could not afford or those who have borrowed into retirement.
Claims management firms can charge fees of up to £500 for handling the case and take 25% of compensation won.
However, claimants who go directly to the FOS for free have just as much chance of having their case upheld.
