FOS plans to charge CMCs for bringing cases

The Financial Ombudsman Service is considering charging Claims Management Companies fees of up to £650 per case to help cut down on the tide of speculative claims that can clog up the service. It said more than half of claims that are currently submitted by CMCs and other relevant professional representatives are turned down. At present CMCs are not charged for cases. The FOS is seeking views on the possible charges, which are possible under new powers granted in the Financial Services and Markets Act, which allow FOS to charge CMCs, after draft enabling legislation was published by the Treasury yesterday. In a consultation paper published today setting out its 2024/25 plans and budget the FOS said: “Professional representatives' complaints should be presented and evidenced appropriately. Not doing so, especially across a high volume of complaints, negatively impacts our service standards, our ability to help other customers and our operational cost efficiency.” It said complaints from CMCs not upheld are, “often in circumstances and case types where our approach to issues is already well established, such as fraud and scams, consumer credit affordability and allegations of mis‑sale.” It said CMCs can reduce the volume of cases they refer to the FOS, “by assessing them in line with our published insights.” There are three proposed fee levels, varying from low to high. • A low fee of £50-£100 would be charged on case conversion to cover the cost of initial case conversion only. • A medium fee of £101‑£200 would be charged on case conversions to cover the cost of initial case conversion plus casework time for information management and activity across an increased number of parties involved in the case. • A high full case‑fee level of £650 would be charged to cover the marginal cost per case such as the cost of case conversion, casework time and other costs attributable to resolving the complaint. James Dipple-Johnstone, deputy chief Ombudsman at the Financial Ombudsman, said: “Professional representatives play an important role in resolving financial disputes. However, 20% of cases are brought by representatives, some of whom benefit commercially at scale, yet more than half of such cases are not upheld. "It is therefore timely that we explore whether our fee structure is right for the current climate and best reflects the costs we incur in helping resolve disputes for customers.” At the same time the FOS proposes reducing its case fees and levy charges to businesses by £60m “in real terms”. It proposes to reduce its case fee charged to advisers and providers by £100 per case from £750 to £650 and reduce its compulsory and voluntary jurisdiction levies on businesses. Abby Thomas, FOS chief executive and chief ombudsman, said: “Our plans for the year ahead will help ensure that the customer is at the heart of everything we do. We want every person who engages with our service to clearly understand the outcome of their case. Now more than ever it’s crucial that businesses work with us to improve all customers’ experiences of financial services.” In the next financial year the Financial Ombudsman said it expects to receive 181,300 new complaints about financial providers. It has also set itself a new target of resolving 90% of cases within five months, to build on the progress it has made to get consumers and businesses to settle complaints as quickly as possible while maintaining the quality of judgements. The FOS reported that it had reduced the average time it takes to resolve a case from 4.8 months in 2022/23 to 3.2 months in the first half of this year while improving the percentage of cases meeting its quality assessment from 92% in 2022/23 to 94%.

FOS plans to charge CMCs for bringing cases

Related items