Thousands of UK households face £625 bill at top of inbox after missing 'small print'

Millions have been left in debt over a "sneaky" small print that could leave plenty of others across the country hundreds of pounds out of pocket. Borrowers who use a claims management firm to help them get compensation for un-affordable lending could be hit, according to consumer groups.

Claims management firms are a kind of representative firm that will handle your compensation claim for you. These companies charge a fee for their services and they usually operate on a "no win, no fee" basis, which means they only charge a fee if your claim is successful.

But in some cases, the claims firm might just help you to get a bill wiped, meaning you would then have to pay out of pocket for its services. One customer told the Sun he received an email from the claims firm with an offer from the provider saying it would credit £1,303 back to his account to wipe his balance.

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He received an email from the claims management firm billing him for £625 for its services - 48 per cent. "I'm completely stuck at what to do, there is no way I can afford to pay them as I'm currently on a debt management plan with more financial worries," Tom said.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said it can be tempting to sign up to claims firms because "they offer to take the hassle out of the process", but the cost can come as a "horrible surprise".

"The real horror of this particular charge is that you’re not getting a payout from which the claims compaeny takes a cut, so you need to find the money from elsewhere," she said. "In many cases, people are only making these claims because money is so tight, so paying a claims firm can push them further into financial difficulty. They’re escaping from the frying pan, straight into the fire."

"In many cases it’s perfectly possible to make a claim yourself," she added. "Don’t assume it’s too difficult or complicated, but speak to a charity like Citizens Advice, who can talk you through what’s involved. You could protect yourself from a nasty financial surprise."