Go-and-win-not-free - Poor are Hit Hardest by Compensation Culture

But new research – conducted by BBC Radio 4’s ‘File on 4’ programme – suggests that it is the very poorest sections of the community who lose out when seemingly failsafe claims go wrong.

Some people have been left in debt to the tune of £2,500. The industry looks like it was past it’s prime some time ago – in 2004, the personal injuries group Accident Direct sacked it’s 2000-plus workforce by text message after a slew of failed cases, whilst The Life Repair Group needed some major renovation work itself after it went into administration the previous year. Whilst the job losses associated with these companies’ collapse is bad enough for those afflicted, the real losers were the (for the most part) poor and ill informed customers that they targeted. For John and Lesley Pace of Pencoed, South Wales, they thought that Christmas had come early when they received a knock on the door from a representative of CMS Investigations, who had also been targeting homes in Northumberland and the Midlands.

They advised the Paces that they may have a compensation claim case against their local housing authority, as their council house had been damp and draughty for many years. They were advised to take out an insurance policy for £519 for legal costs in the event that the case was lost – a strange enough practice when the arrangement is meant to be ‘no win no fee’. This was paid for with a loan from the First National Bank.

The plot thickened when the Paces won their case and were awarded £1000 in compensation. Just a few weeks later, their delight was cruelly spoilt when they received a bill for £1481.86. Apparently, costly risk assessment reports vital to the success of the case had been performed at their expense, and coupled with the exorbitant interest charges added to the loan repayment, effectively meant that their fee was greater than their win – they owed money after going through the hassle and distress of a court case. Mr Pace put his opinion in no uncertain terms: "I'd love them [CMS] to come here and knock again. They'd be out through the gate before their feet could touch the ground".

But their heartache hadn’t come to an end yet. The insurance policy that the Paces had taken out was designed to pay out only if they lost their case – because they won, they were still liable for the legal costs of the court case. These ended up being £8,697 agreed. Understandably, the Paces are outraged: “There’s no way I’m paying” Mrs Pace said. “I’d rather go to prison.”

It’s understandable that emotions are running high when such malevolent practices are still occurring in Britain. Before you get involved in the seedy world of ‘no win no fee’ compensation claiming, be sure to get your facts straight: you could end up paying more than you bargained for.