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Fees release me

Regular readers of this column will know that the Financial Ombudsman Service case fee has never sat particularly easily with me. Paying a case fee when a firm has behaved professionally, sought to resolve a client’s complaint, been reported to the ombudsman and found not to be at fault seems to be against the natural order of things.

After many discussions with the ombudsman, we were delighted when its new chairman, Sir Christopher Kelly, announced in his speech at the Aifa annual dinner that he was prepared to look again at the way the FOS is funded. His determination to do this can be seen in the ombudsman’s plan and budget, which call for suggestions for a better way to fund the system.

I am very pleased we have reached this position. It is always satisfying to achieve something that other people said was impossible and it gives me confidence that other obstacles to a fairer deal for Aifa’s members can be overcome. Well, we have done the first half. We now have the difficult bit to do – devise a system that members think is fairer and works better for them. We now need your views in order to formulate our response to the proposals. We would like your comments on the following:

  • Keeping the general levy the same as last year and increasing the case fee. (This year the proposals equate to 73 per cent of the budget being raised by case fees.)
  • Abolishing the case fee. A higher general levy would be required to meet the funding gap. However, you should consider this suggestion carefully as it is not as helpful as it may seem. The principle that good firms should not pay for bad counts for a great deal.
  • Tiered case fees. Firms pay a higher fee depending on complexity and time taken to resolution, so cases that are resolved swiftly attract a lower fee than currently.
  • Increasing the number of free cases per firm. Remember, fewer case fees will impact on the general levy.
  • An option to pay up-front and receive a refund if the complaint is found in the firm’s favour.

Historically, we would have simply dismissed an option where the customer pays, given the political climate. However, we should not be too fast to walk away from this completely. The FOS is an essential part of the regulatory system and provides consumers with the confidence that, if they have a genuine complaint and cannot gain a satisfactory outcome, there is an impartial system to rely on. This is a strong foundation for our sector that should deliver more consumer confidence than it currently does.

Why doesn’t it deliver far greater confidence? Part of the answer is that too many people recognise how easy the system is to abuse. The issues around mortgage endowment complaints demonstrate that the ombudsman has become an opportunity for some people to seek money with no real thought of the consequences for their advisers. I cannot dismiss the idea of asking consumers to pay at least a refundable deposit if they wish to complain to the FOS.

The openness to discuss fees is very positive. It is now up to us to answer the challenge and we need member feedback to ensure we give a united, professional response.

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