The Financial Ombudsman Service has further progressed its plan to charge a complaint fee on claims management companies, after receiving good support from stakeholders. FOS Chair Baroness Manzoor confirmed broad agreement for the initiative in a recent update, adding that it will also help bring about a fairer fee structure by sharing costs between respondent firms and CMCs.
Balancing Fee Levels
While the majority support the introduction of a complaint fee, opinions remain divided on the appropriate level. Respondent firms advocate for the full £650 case fee to apply to CMCs, while CMCs argue for either no fee or a significantly reduced charge. The Ombudsman has proposed a £250 fee per case, with a reduced fee of £75 if the case is decided in favour of the complainant represented by the CMC.
Baroness Manzoor emphasised that the proposal ensures fairness by offsetting fees when complaints are not upheld. If the FOS does not decide in favour of the complainant, the respondent firm’s £650 fee will be reduced by £175, and the CMC will pay £75 to cover case set-up costs.
Free Case Limit Increased
To support smaller CMCs, the FOS plans to increase the free case limit from three to ten per financial year. This adjustment will allow smaller firms to test cases involving new issues, enabling them to refine their due diligence processes for similar cases in the future. With this change, over 80% of CMCs currently referring cases will not fall within the fee’s scope, targeting only larger firms.
Implementation Timeline and Industry Implications
The FOS expects to implement these changes in early 2025, giving CMCs sufficient time to prepare for the financial and operational impacts. CMCs highlighted the importance of advance notice to adjust cash flow and ensure readiness for the new fee structure.
In addition to addressing cost-sharing, the FOS plans to use the fees collected to enhance outreach and engagement efforts, raising awareness of its services and improving accessibility for consumers.
Industry and Government Backing
The proposals have garnered support from City Minister Tulip Siddiq, who expressed her approval for the changes aimed at improving the financial and operational balance of the FOS.
This move reflects a broader effort by the FOS to address concerns about fairness in its fee arrangements and to ensure that all parties involved share the financial responsibility for complaints processing. By targeting only larger CMCs and maintaining a focus on fairness, the FOS seeks to foster a more equitable environment while continuing to support consumers and the financial industry.
Financial Ombudsman’s new initiate could close the door to professional support for some claimants.
In spite of our heavy reservations on how this will impact client’s ability to utilise quality industries professionals, the Financial Ombudsman Service appear to be pressing on with their plans to enforce fees on professional representatives like claims management companies and solicitors who are submitting claims to the FOS.
Whilst we understand the reasons this has been imposed we still strongly believe that a strike policy on the companies putting strain on the FOS with low quality spurious claims would be a much more fair and reasonable approach and an adequate deterrent.
The reasons for issues were highlighted in our article –
If you want to investigate a claim against a pension provider, financial adviser or any regulated financial services company who are still trading and want the benefit of professional support, then there is now further incentive to act quickly.
Start your claim today or book an appointment with one of our financial services claims experts here today.
Tony Carter
Managing Director
HT Legal Ltd (Claim My Loss)
