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Aifa in fee talks with watchdog

FOS says lower volume of endowment complaints will see its costs rise.

Aifa will meet the Financial Ombudsman Service this week to scrutinise its arguments for raising the case fee for advisers by more than 10 per cent.

Aifa director general Chris Cummings says he is disappointed by the proposed rise in case fees in April from 360 to 400, which was contained in the FOS’s corporate plan and budget for 2007/08.

The FOS says it is the first time that it has raised case fees and blames a combination of having to deal with time-barred cases, where it does not get a fee, and an expected rise in unit costs due to a lower volume of mortgage endowment complaints in the future. It says the alternative would have been a disproportionate rise in the annual levy, resulting in the levy accounting for around 40 per cent of its income.

Cummings says he does not accept these arguments and is worried that advisers could face the “worst of both worlds”, being hit by more cases while also paying higher fees.

Directly authorised advisers will still receive two free cases, with a more fundamental restructure being looked at through the FSA’s review of FOS funding.

FOS spokeswoman Emma Parker says: “This rise is needed due to an expected increase in unit costs as we will be dealing with fewer cases of a similar nature and the fact that we have to look at time-barred mortgage end-owment cases without receiving a fee.”

Cummings says: “We are meeting the ombudsman to go through the detail of this proposed increase. The discussion paper on future FOS funding has obviously been affected by cross-lobbying and we are very keen to see dramatic changes to a system that provides no justice for the innocent.”


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