FOS to increase 'free cases' limit to 25
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.”