No-win, no-fee firms that take 40% of payout for f light delays
‘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 flightdelays.co.uk 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.
Airfair.com 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. co.uk 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.’