Context
The Financial Ombudsman Service (FOS) has set out proposed changes to its fee structure in a consultation, following the introduction of legislation in Parliament.
Key points to note and next actions
FOS proposes to charge Claims Management Companies (CMCs) and other professional representatives up to £250 to lodge a case, reduced to £75 if the case outcome is in favour of the consumer. The proposed new case fees are detailed as part of a consultation launched by FOS. Under the proposals, consumers would continue to be able to bring cases directly to FOS totally free of charge as would families, friends, charities and voluntary organisations who may be helping them.
However, cases brought by CMCs or professional representatives would incur the new fees. The FOS is seeking to make the fee model fairer by recovering some of its costs from CMCs and representatives as well as from financial services firms. As is the case for financial services firms, all professional representatives will be allowed three free cases a year; beyond that they will be charged the £250 fee – reduced to £75 if the consumer’s complaint is upheld.
Under the proposals FOS has sought to ensure it will not benefit either way from decisions. If the complaint is not upheld, the higher fee collected from the CMC or professional representative will be used, in part, to reduce the fee for the financial business against whom the complaint was initially raised; i.e:
- If a complaint is not-upheld, the CMC or professional representative pays £250 and the financial business responding to the complaint pays £475;
- If a complaint is upheld, the CMC or professional representative pays £75 and the financial business responding to the complaint pays £650.
James Dipple-Johnstone, Deputy Chief Ombudsman at the FOS, said: “We are committed to improving our service so it is as easy to use and accessible as possible, while ensuring it remains free for all consumers and that those with upheld complaints can keep all of any award we make. Professional representatives can play an important role in resolving financial disputes. However, they gain financially from our service without contributing to the running costs, and with little incentive to ensure that claims they advance have merit. The new proposed charges are important to ensure we cover the costs associated with helping resolve disputes and we feel reflect a fairer allocation of those costs.”
Firms that wish to provide comments regarding the consultation must do so by 4 July 2024.