MoneyMatcher forcing payment for failed PPI claim

does this seem strange to you?

Yes.

Unless they advised you to take it to the ombudsman then why would you? After all, you employed them to use the free of charge process.

I have phoned them numerous times but they insist I must pay it and do not listen to my complaint so I need some advice on what to do next.

You put your complaint in writing to them (keep a copy of the letter and the date you posted it). State that your complaint was rejected by the lender and you received no communication from them to refer the case to the ombudsman and therefore did not proceed as they had not told you to.

Also state in your complaint letter that you will refer the complaint to the legal ombudsman as they have failed to take your complaint over the phone and are harassing you for the money when you have not done anything wrong.

Referring to the FOS is not an automatic stage in the process. Its only to be used if you feel the rejection reason is unfair or incorrect. So, if you didnt think there was reason to go to the FOS and they didnt tell you to then the process should end there.

Can I just ignore them and they'll go away?

You shouldnt ignore them as they can attempt to take you to the small claims court. So, you should at least register your complaint with them and keep copies you can present the court should they do this.

Can they affect my credit rating?

Only if it goes to court and you lose and you dont pay the money. However, they appear to be trying it on as you employed them to make the complaint. They did so and the complaint was rejected. That is where it should end. This extra money is not justified.