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Categories:Advisers,Regulation

FOS to increase 'free cases' limit to 25

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The Financial Ombudsman Service is proposing to increase the number of free cases that firms are allowed before having to pay a case fee from three to 25 per year.

Currently firms that have four or more complaints referred to the FOS over the course of a year have to pay a case fee of £500 to the FOS.

Under proposals published today, the FOS is consulting on increasing the number of free cases so that firms with 25 complaints or less referred to the FOS during the year would not incur a case fee. If agreed, the new case fee structure would be introduced from April 2013.

The FOS calculates this proposal would result in just 1 per cent of businesses paying any case fees. Network members will continue to be liable for case fees as the free cases will apply to the network as a whole.

It is also consulting on developing a new group account arrangement for the ten financial services groups that account for over 70 per cent of the FOS’ complaints workload.

The move is an attempt to reflect the total cost to the FOS of the work generated by each company.

The FOS has also published a consultation on its annual plan and budget for 2012/13.

It is freezing both the case fee at £500 and the industry levy for the third year in a row.

However although the FOS froze the industry levy last year, last March the FSA approved a £25m industry levy increase to allow the FOS to boost its reserves to cope with the deluge of payment protection insurance complaints.

PPI complaints are expected to make up half of the FOS’ workload over the next financial year.

As a result the FOS is consulting on plans to charge businesses a supplementary case fee of £350 for each PPI misselling case referred to the FOS. The supplementary fee will be charged where businesses have more than 25 PPI complaints.

The FOS says this will reflect where costs are incurred in resolving PPI misselling on such a large scale.

FOS principal ombudsman Tony Boorman (pictured) says: “A year after the High Court ruling gave us legal finality on the approach that financial businesses should take on PPI complaints, it is disappointing that there is little finality for significant numbers of consumers who are still waiting for their bank or insurer to deal with their complaint.

“The delays and inconvenience that this causes consumers means the ombudsman now has to gear up for unprecedented demand and volatility in our workload. Our proposals to make sure we have the capacity to handle record volumes of cases involve those businesses who account for these complaints having to contribute the most to sorting out the problems.”

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Readers' comments (12)

  • Good start.

    Now, we need them to follow the law, allow appeals to be heard independently, allow pesonal hearings and accept that the national mindset is to grab compo whether or not it is legally or morally due.

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  • The timing of the fee should be decided by when FOS accept the referral not when they finally get round to adjudicating on it. With cases taking well over 12 months to be decided a small firm that has say 6 cases over two years could find FOS increasing their resources and deciding those cases in one 12 month period costing them £1,500 when their should have been no fee. The same could happen with PPI with ambulance chaser activity after the increase to 25 and then it would be £850 per case. It wouldn't be so bad if FOS were unbiased and efficient.

    Rant over back to training my pigs to fly.

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  • FOS proposes boosting the number of free cases from 3 to 25 in 2013

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  • Will this be free cases per registered individual if you are a Network Member or is the Network classed as one business as a whole.

    I had a mortgage case last year that was rejected by FOS, however Sesame still deducted over £500 from me

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  • Hi Bob,

    Network members will continue to pay case fees as the free cases will apply to the network as a whole.

    Regards

  • It flies in the face of justice that the IFA should pay for failed claims. It does not matter if this is paid by a levy or individual fee it is still outrageous.
    The claimant should pay a fee with the complaint to be returned only if the complaint is upheld.

    Colin Linscott

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  • I have had several complaints over the years they were all rejected by FOS however I still had to pay.
    Just because you get a complaint this does not mean you are a bad adviser. Many of these complaints are brought about by unscrupulous complaint companies that advertise in the Media.
    The last complaint I had was from a client complaining about his fixed rate mortgage saying that he would have been better staying on a variable rate my initial advice was well documented abd FOS rejected the claim BUT I still had to pay over £500

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  • I have just been informed that the position for network members will remain the same, i.e. that the network is classed as one business as a whole.

    Its easer for the Regulators to monitor Network Member via the Networks so why should the Network Member Businesses not have Free Cases

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  • I don't really see why there should be an extra cost involved in resolving PPI cases.

    There is something of an economy of scale with them and in my experience they are generally much easier than cases involving investments where you are trying to tease out the ATR and the work out the standards required of the adviser from the last millennium.

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  • Whilst I have had no complaints go to FOS, I agree with the earlier poster (and Alan Lakey). "It flies in the face of justice that the IFA should pay for failed claims."
    The system is unjust and puts expediency over justice and both are one sided.

    If we were given the choice of true exepdiency, we'd opt for true mediation backed up by the right of BOTH parties to resort to law. The consumer is given all the rights, which is simply immoral.

    Did ANY advisers ever agree to the system which was imposed on us by the FSMA 2000?

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  • "Network members will continue to be liable for case fees as the free cases will apply to the network as a whole."

    Says who??

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