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FOS increases case fee to £550 and hikes levy 30%

The Financial Ombudsman Service is to increase its standard case fee from £500 to £550 and hike the total amount it levies firms from £17.7m to £23m.

It is also increasing its total budget by 90 per cent from the £147.2m forecast for 2012/13 to £280.1m for 2013/14. The budget including levies on financial services firms, those who hold consumer credit licences and the amount raised from case fees.

In its plan and budget for 2013/14, published today, the FOS says the standard case fee will increase to £550 in April.

It has also confirmed plans to increase the number of free cases from three to 25, also in April.

The FOS is funded by a combination of case fees, which currently firms have to pay if they have four or more complaints referred to the FOS within a year, and a compulsory levy imposed on all financial services firms.

The FOS has frozen the standard case fee for the last four years, but last year said this would be unsustainable in future due to rising costs and the increasing complexity of cases.

The FOS says many firms will have to pay a “slightly higher” levy in 2013/2014, depending on which FSA fee block they are in.

The FOS is also planning to introduce a new “group account” fee structure for the largest firms. The FOS says the new structure would apply to the four biggest banking groups that together account for 60 per cent of its caseload.

Group account fees would be set in advance with a quarterly fee based on the proportion of complaints from each group. Fees would then be adjusted at the end of the year if actual complaint figures were markedly different. Group account fees will also be introduced from April.

The FOS says most of its workload continues to stem from complaints about payment protection insurance misselling. It is currently receiving 5,000 new PPI complaints a week and expects this trend to continue. Last year the FOS introduced a supplementary case fee of £350 for complaints about missold PPI. The supplementary case fee is paid when the case is referred to the FOS, as opposed to when the case is resolved for standard case fees.

The FOS plans to keep the £350 supplementary case fee for PPI complaints for at least another year, though says it will keep the fee under review.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. another way to extort money from IFAs’
    No choice but to pay up or be closed down.

  2. Last one out turn out the lights!!

  3. the number of free cases has gone from 3 to 25 so this is good for IFAs unless you get more than 25 complaints go there in which case you are probably doing something wrong..

  4. Derek Bradley ceo Panacea Adviser 10th January 2013 at 10:23 am

    25 free cases I understand does not apply to networks, I believe their figure is zero, so I can see some logic in the fee hike, which is unusual for me, but I am sure a network adviser will not be too happy.

    I do worry about phrases like “firms will have to pay a slightly higher” levy in 2013/2014”- size as always is in the eye of the beholder!!

  5. Being attached to a network we have no free cases as they’re all grabbed by the network concerned. As the IFA numbers go down and the cases they’re dealing with goes ever upwards it doesn’t take a genius to work out this is just the tip of the iceberg. Network fees going up, FSA fees going up, FOS fees and levies going up, PI costs increasing, postage costs going up, utility bills going up, its never ending can anyone really see a long term future in financial services, because I can’t? These institutions hold a privileged position in todays climate where they can just increase their costs with total impunity knowing the bill will be picked up regardless of their waste and inefficiency. We’re a soft touch, and I don’t see it getting better any time soon.

  6. Anon@10.11
    You will still have to fork out 30% extra in fees, whether or not you have any complaints.

  7. FOS fees rising, FCA/FSA levies rising, PI insurance rising, all at a time when there is downwards pressure on fees post RDR.

    Sadly the reality is that more firms will go out of business leaving the consumer with less choice and ultimately fewer people receiving good quality financial planning advice.

    Still Hector got a knighthood, so that’s good news….

  8. Best Advice – don’t get it wrong, do the right thing for the clients, regardless of whether it is economical to do so – result – zero complaints.

    The future product ranges are going to reduce drastically and I cannot see why any adviser would recommend an investment product or fund with a risk profile higher than moderately cautious, why expose yourself to a potential complaint.

    However that will have an effect on the capital market inputs, on which industry and commerce rely and thus will eventually produce no economical benefit for the country.

    We are in a mess aren’t we!

  9. If they stopped paying massive fees to Recruitment agencies for staff that are there for only 5 minutes they wouldn’t have to increase the fees….. Efficiency Natalie!!!!

  10. 1000 new staff are being hired at the ombudsman. The gravy train gets fuller.

  11. Would it not be great if ifa’s could just increase their fees by a massive amount with clients forced to pay. Can just see it, my costs have increased and rather than run my business efficiently I am going to pass on the cost. I do not think so.
    This is a monopoly and nothing short of extortion.
    IFA’s get poor value , a hostile service, poor quality staff and are forced to pay anyway.

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