Context
FOS has announced the publication of a Policy Statement (containing final FCA Rules) that will make its funding arrangement fairer by proceeding with a proposal (which has been subject to two separate Consultations) to charge professional representatives £250 to refer a case to FOS from 1 April 2025. Professional representatives were behind around 103,000 of the 220,000 complaints FOS received between April and December 2024 (some 47%). The professional representatives will receive £175 back if the case outcome is in favour of the consumer. It will remain free for consumers to refer a complaint themselves, and for charities, families and friends who may be helping them.
Key points to note and next actions
- Professional representatives will be able to bring ten cases to FOS for free each financial year. After that, every subsequent case they refer will be chargeable.
- If a complaint referred by a professional representative is not upheld or is withdrawn, the financial business against whom the complaint was made will pay a reduced case fee of £475, instead of £650.
- The move aims to make the funding arrangements fairer and to encourage professional representatives to submit better-evidenced complaints, considering their merits more diligently before referring them.
- Only 26% of cases brought by professional representatives were found in favour of the consumer, compared to 38% of those brought directly by consumers for free.
- The professional status of these firms should mean that these complaints have a considerably higher success rate, compared to consumers who use the service without professional representation.
- The fee is part of a wider range of measures being brought in to encourage firms to submit well-evidenced complaints.
In summary, FOS has decided it will charge CMCs where the complaint:
- is referred to FOS on or after 1 April 2025;
- is referred by a person specified under Regulation 3 (defined as a ‘complainant representative’ in the FEES Instrument, see Annex 2); and
- exceeds the CMC’s annual free case provision (see page 7 of the policy statement and Annex 2).