No-win, no-fee firms that take 40% of pay­out for f light de­lays

Daily Mail - - News - By James Sal­mon Trans­port Cor­re­spon­dent

‘Des­per­ate need of an over­haul’

FRUS­TRATED hol­i­day­mak­ers are need­lessly hand­ing over hun­dreds of pounds in com­pen­sa­tion for de­layed flights to claims man­age­ment firms.

The ‘no-win, no-fee’ firms deduct up to 40 per cent of pay­outs for flights that are de­layed for three hours or more or can­celled.

In the worst cases, pas­sen­gers are be­ing asked to hand over £215 from a £532 pay­out.

The fees in­clude a ba­sic cut of up to 30 per cent of the com­pen­sa­tion, plus an ‘ ad­min­is­tra­tion fee’ of up to £25, and VAT charged at 20 per cent of the main fee, ac­cord­ing to an in­ves­ti­ga­tion by con­sumer group Which?

De­spite the ex­or­bi­tant costs, cam­paign­ers say hun­dreds of thou­sands of trav­ellers are turn­ing to th­ese firms be­cause of air­lines’ ten­den­cies to wrig­gle out of pay­ing com­pen­sa­tion. Air­lines have also been crit­i­cised for mak­ing the process as tor­tu­ous as pos­si­ble to put Bri­tons off lodg­ing claims, even though they are en­ti­tled to do so un­der EU law.

Claims man­age­ment firms have been the main ben­e­fi­cia­ries, rak­ing in tens of mil­lions.

The ‘ scan­dalous’ fees have prompted calls for tougher rules forc­ing air­lines to au­to­mat­i­cally pay com­pen­sa­tion.

Most firms of­fer a ‘no win, no fee’ ba­sis, mean­ing they will not charge for un­suc­cess­ful claims.

Un­der Brus­sels rules, pas­sen­gers de­part­ing from EU air­ports are en­ti­tled to com­pen­sa­tion of be­tween £220 and £360 on short-haul flights and up to £532 for longer jour­neys. Flights have to be de­layed at least three hours. Which? an­a­lysed the most pop­u­lar claims man­age­ment firms.

It found flight­de­ took a fee of 29 per cent of the com­pen­sa­tion, plus a £25 fee and VAT. No in­for­ma­tion on fees is fea­tured on its home page. The firm claims to have re­cov­ered more than £25mil­lion. Based on this it would have taken £7.25mil­lion from the main fee, plus £5.5mil­lion in ad­min charges.

Air­ takes a 30 per cent cut plus VAT – equat­ing to £191.50 on a £532 pay­out. Again there is no men­tion of the fees on its home page. EU­claim. deducts £185 – in­clud­ing a 25 per cent fee, a £25 ad­min charge and VAT.

Other firms, in­clud­ing Which?, of­fer a free ser­vice. Which? spokesman Alex Neill said: ‘The fact that pas­sen­gers are will­ing to lose a sub­stan­tial chunk of the com­pen­sa­tion ... shows that the sys­tem must be changed.’

Tory MP Huw Mer­ri­man, who sits on the Com­mons trans­port com­mit­tee, said the rise of the claims in­dus­try showed the com­pen­sa­tion process is ‘un­nec­es­sar­ily com­plex and in des­per­ate need of an over­haul’.

Flight­de­lays said its charges are slightly higher as it cov­ers the cost of clients’ le­gal pro­ceed­ings. Man­ag­ing di­rec­tor Steve Phillips backed calls for air­lines to pay au­to­matic com­pen­sa­tion. Air­fair boss Will Smith said: ‘Air­lines are con­tin­u­ously putting up bar­ri­ers to make it dif­fi­cult for pas­sen­gers to claim them­selves. We have over­come th­ese bar­ri­ers.’

EU­claim said it had a ‘97 per cent suc­cess rate in court’, adding: ‘We are proud at how many pas­sen­gers we are able to help at our cur­rent ... prices.’

Trade body Air­lines UK said air­lines were ‘clear with their cus­tomers’ that di­rect ap­pli­ca­tions were the best op­tion, and that pay­ing fees to third par­ties was ‘un­nec­es­sary’.

An­drew Haines, of the Civil Avi­a­tion Au­thor­ity, said: ‘Pas­sen­gers can be con­fi­dent that we have un­der­taken a num­ber of sig­nif­i­cant steps to en­sure that air­lines com­ply with their obli­ga­tions.’

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