Claim companies should contribute to FOS, says ABI
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The Association of British Insurers has called on the Financial Ombudsman Service to look at ways for claim management firms to contribute to FOS funding.
The FOS is currently funded by industry levies and case fees paid by the business that is the subject of a complaint.
A firm does not have to pay a case fee for the first three cases during the year. For the fourth and each subsequent complaint, a firm has to pay a £500 case fee.
In the FOS’s annual consultation on its plan and budget for 2011/12, published in January, the FOS says it plans to freeze the case fee and industry levy for the second year running. But it warns it may need to increase reserves because it is concerned about lost case fee income pending the outcome of the judicial review brought by the British Bankers’ Association into payment protection insurance.
In its consultation response, the ABI says it supports the FOS’s plan to freeze the basic levy and case fee. But the trade body adds: “The FOS should also explore other ways of reducing costs for firms, including options for claims management companies to contribute to funding.”
Plan Money director Peter Chadborn believes it would make sense for claim management firms to pay towards the cost of the FOS.
He says: “Surely it is not beyond the wit of the number crunchers to identify what percentage of claims come via claim management companies and what percentage come from the consumer.
“Many people will testify to the fact that claim management firms aggressively market their wares on the basis that the customer has got nothing to lose.”
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Readers' comments (2)
Anonymous | 15 Mar 2011 4:39 pm
Here's an idea - how about the banks (who have mis-sold all these policies and are causing all the backlogs at the FOS) actually pay their fees instead of hiding behind the Judicial review they brought in the first place! And how about the banks actually accepting the decisions that the adjudicators at the FOS are making and not continually rejecting or ignoring them!
If CMC's have to pay FOS fees they will simply be passed onto the clients to pay and the FOS is no longer a free service.
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Anonymous | 15 Mar 2011 5:30 pm
FOS is NOT a free service. Like everything else in life it has to be paid for.CMCs should be made to contribute. This might make them consider whether the case has any substance to it or whether it is simply frivolous or vexatious.
It is unfair when companies have to investigate and answer what amounts to nonsense claims instigated through CMCs by a client who is just "chancing it" to see if they will get any money. It is often nothing more than a fraudulent attempt to extort money.
I have every sympathy with genuine cases but they are not helped by these charlatans.
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