The Financial Ombudsman Service said the £250 fee would be reduced to £75 if the case outcome is in favour of the consumer
Claims management companies (CMCs) could be hit with new fees of up to £250 to lodge a case, under plans from the financial ombudsman aimed at making costs fairer.
The Financial Ombudsman Service (FOS), which settles disputes between consumers and financial firms, said the fee would drop to £75 if the case outcome favours the consumer. The service will continue to be free for individuals who bring their case directly, as well as families, friends, charities, and voluntary organisations assisting them, the ombudsman confirmed.
These proposed new case fees are part of a consultation open until July 4. Currently, businesses responding to a complaint fork out £650 per case. The ombudsman is aiming to make its fee model fairer by recouping some of its costs from CMCs and representatives, as well as financial services firms.
Like financial services firms, all professional representatives will get three free cases a year, after which they’ll be charged the £250 fee, reduced to £75 if the consumer’s complaint is upheld, the service stated. Under these proposals, if the service doesn’t uphold the complaint, the higher fee collected will be used to lower the fee for the financial business against whom the complaint was initially raised.
James Dipple-Johnstone, the deputy chief ombudsman at the Financial Ombudsman Service (FOS), has made it clear that the aim is to enhance their service, making it more user-friendly and accessible while ensuring it remains free for all consumers.
He stated: “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.”
Dipple-Johnstone then highlighted the importance of the proposed fee changes, which aim to cover the costs associated with resolving disputes and provide a fairer distribution of those costs. “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. We welcome all views on our proposed fee changes.”
The Government is now taking steps under the Financial Services and Markets Act 2023 to enable the ombudsman service to revise its current fee-charging framework. Claims management companies (CMCs) typically take a portion of any payout awarded, but when consumers approach the ombudsman directly, they retain the full value of any redress.
The FOS revealed that over the last two years, one in five cases referred to them involved professional representatives. However, in these cases, less than a quarter resulted in a different outcome for the complainant compared to what the responding firm had already offered, according to the ombudsman’s findings.
