Shock bill for personal injury winners

Thousands of people who took out successful personal injury claims are about to receive bills for more than £1,000 each - money which they did not know they owed.

The claimants were customers of now defunct companies such as The Accident Group and Claims Direct who advertised a no-win-no-fee policy, BBC Radio 4's You and Yours revealed on Friday.

Such firms sprung up after 1999, when the government withdrew legal aid from people seeking personal injury compensation.

The companies earned their money by making claimants take out a bank loan.

In the dark

That bank loan would fund an insurance policy which would pay their legal costs if the case failed, hence no win, no fee.

Winning clients were led to believe they would never have any bills to pay because the losers' insurers would pay off the loan.

But for more than 80,000 people the loans they signed up for have never been fully repaid, and many are about to receive a bill from the bank.

One bank, First National, formerly owned by Abbey did not even tell 30,000 of its customers the loans were still active, and accruing interest at a rate of 10%.

Another 50,000 customers who took out loans with HBOS may still be in the dark.