Financial Ombudsman mulls plans to charge claims management firms

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The Monetary Ombudsman Service (FOS) is charging claims administration firms and no-win, no-fee legislation corporations to make complaints in a U-turn only a yr after ruling out the transfer.

The FOS vowed to maintain complaints free for shoppers however is launching a session on charging for complaints from claims administration firms (CMCs) and different skilled representatives after seeing a surge in circumstances.

A fifth of its casework is now via these corporations, it stated.

The FOS stated it had now been handed new powers within the Monetary Companies and Markets Act, permitting it to cost for these kinds of claims ought to it resolve to go forward.

It comes only a yr after it dominated out charging CMCs for complaints following suggestions on the matter as a part of its wider 2022-23 plans and funds session.

The FOS additionally stated on the time that it might not proceed with legislative adjustments to allow it to cost skilled representatives.

However the change of stance comes after a leap in circumstances from these corporations, in addition to “good and unhealthy behaviour” being seen within the sector, which impacts its capability to assist different clients and will increase case occasions, in keeping with the FOS.

James Dipple-Johnstone, deputy chief ombudsman on the FOS, stated: “We’re dedicated to enhancing our service so it’s as simple to make use of and accessible as potential, whereas guaranteeing it stays free for all shoppers and that these with upheld complaints can maintain all of any award we make.

“Skilled representatives play an vital position in resolving monetary disputes.

“Nonetheless, 20% of circumstances are introduced by representatives, a few of whom profit commercially at scale, but greater than half of such circumstances usually are not upheld.

“It’s, subsequently, well timed that we discover whether or not our charge construction is true for the present local weather and finest displays the prices we incur in serving to resolve disputes for purchasers.

“We welcome all views from business and shopper teams on our proposals on whether or not and the way a charging regime would possibly work in follow.”

The FOS revealed it’s contemplating charging CMCs {and professional} representatives between £50 and £200 upfront for preliminary work on the case, relying on complexity, or a possible £650 on closure of the case to cowl the price of case conversion, casework time and different prices concerned in resolving the criticism.

However it is usually proposing that the primary three complaints circumstances can be freed from cost.

It’s on the lookout for views on how a charging regime is perhaps launched, together with on the charge ranges, in addition to the influence on criticism volumes, the potential influence on totally different teams of complainants and the lead time required for companies {and professional} representatives to be prepared for adjustments.

The session is open till January 30.

Particulars of the proposals had been revealed alongside particulars of its plans and funds for 2024-25, which reveal it’s anticipating to obtain 181,300 new complaints about monetary suppliers within the subsequent monetary yr.

It’s set to chop the price of its service to business, with proposals to cut back the case charge by £100 per case to £650.

General, it stated adjustments would result in a £60 million lower in case charge and levy prices to companies.

It has additionally set itself a brand new goal of resolving 90% of circumstances inside 5 months.