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Euro rights may double the cost of complaints

IFAs could see the cost of dealing with complaints double when a European

directive becomes UK law.

The LIA says the cost of the complaint procedure could soar to £1,500

because the European Convention of Human Rights gives everyone the right to

a hearing.

It says IFAs will have to set up and pay for the infrastructure to hear

complaints. The handling of complaints is currently a deskbound process.

The Financial Ombudsman Service says the right to a hearing applies to

firms as well as individuals, which could see costs rise across the

industry.

But the ombudsman is playing down the possible impact on IFAs, saying many

consumers will not stand up and put their cases in court. The Human Rights

Act comes into force in the UK this year.

LIA public affairs director John Ellis says: “As well as increasing the

cost of the complaint procedure, an expense which is borne by the firm, the

convention means IFAs would have to set up a whole infrastructure too.”

Financial Ombudsman Service spokesman Iris Baker says: “The right could

result in an increase in costs but we are not sure what the take-up will

be. In our experience, individuals prefer the informality of the current

process.”

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