The Financial Ombudsman Service has confirmed its intention to increase the number of free cases that firms are allowed before having to pay a case fee from three to 25 per year but rejected calls for claims firms to pay a fee.
Currently, firms have to pay a £500 case fee for the fourth and each subsequent case referred to the FOS over the course of a year.
The new case fee structure will be introduced from April 2013.
In its case fee feedback statement published today, the FOS says: “We intend to proceed with our proposal to increase the free case threshold to 25, and we will include this in our proposed funding arrangements for 2013/14.
The FOS rejected calls from industry stakeholders to introduce fees payable by claims management companies.
It says: “We do not believe this would be the right way forward, even if we had the powers to require this. And we do not believe that such a requirement would address the underlying issues in the claims management sector, not least because the costs would ultimately be borne by consumers themselves.”
It calculates case fee changes 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.
Large businesses with over 2,000 cases referred to the FOS in one year will not qualify for any free cases but would be subject to a new group account arrangement aligning fees to the amount of work generated by each company.
Forty Two Wealth Management partner Alan Dick says: “I think this is a step in the right direction, customers deserve to be treated fairly and the FOS is a big part of that. I do think that claims management firms should be brought into scope because they are largely responsible for the amount of frivolous claims that are made.”