View more on these topics

FOS rejects calls for claims firms to pay case fee

/g/b/r/FOSFinancialOmbudsmanService.jpg

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.”

The FOS published its consultation on case fees in January.

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.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Bob Riach Riach Independent Financial Advisers 7th August 2012 at 11:51 am

    Something should be brought in for network members as the number of free cases are taken up by the network very quickly.
    So a network member has NO free cases allowance

  2. So I might get on case referred to the FOS and I have to pay a case fee but others getting dozens if the timing is right might not pay any fees at all as that will come out of the network’s allowance overall. Maybe it’s time to go direct?

  3. Not content with trying to eliminate the IFA sector as a viable method of enabling clients to obtain cost effective advice and services with a total ban on commission for investments, the next nail in the coffin for networks is going to be this issue.

    The case fee exemption should apply to individual advisers not the network as a whole so that if only a handful of advisers cause problems, they would pay, not the collective.

    Another example of the inherent unfairness of this system, along with the ruinous FSCS levy and the draconian, “pass your exams or lose your business” method the regulator has adopted, it makes you wonder who exactly is at the heart of this mess and who is relentlessly driving this forward towards the eventual collapse of the IFA sector.

    And please, don’t put forward the perverted view that by eliminating a significant proportion of the IFA sector who will either just leave and go to more profitable employment without an indefinite liability, or simply sell up and retire, the sector will be strengthened.

    The way to weaken something is to take away its foundations, that is what is really going on. Financial services has always been a transaction based culture, so if advice is still required, why should an adviser actually recommend a product from a particular provider, why not just for example say “buy a personal pension ” and let them do it on the internet.

    It doesn’t make sense to put the least complained about, most responsible and most ethical sector of financial services out of business or reduce its effective use by consumers.

    This is no way to ensure a thriving financial services sector and those who are perpetrating this downgrade or our country’s financial sector are shadowy figures whose identity we are not permitted to know.

    In any other industry, especially manufacturing, they would be hung out to dry.

    In Financial Services, these servants of evil intent, get better jobs and golden hello / handshakes.

  4. Picking up on that point, I do not understand why the authorities seem intent on destroying investment in the private sector by allowing the FSA to destroy the investment market. Just like I do not understand why the authorities have allowed the FSA to destroy the mortgage market place when it has historically underpinned growth.

    The FSA are what they are, is this an excuse however for the elected to allow the unelected to continuely implement new rules that gold back our countries chances if a recovery.

  5. Yet more misuse of statistics – I would back the initial comments above.

    The FOS view is incorrect, or at least misleading in the extreme. When Network members get a complaint, they have to pay the £500 fee to their network and the FOS treats the network as “The Financial Firm” even though it is the member firm who pays. The network gets the free 3 cases (or 25 cases in future) and I am sure that this does not get passed on to the members. Effectively, network members therefore get no free cases at all and they certainly make up far more than 1% of the market. These FOS pronouncements are therefore talking about banks and large financial groups as the 1% and are pretending that small firms will not pay. When I tried to question a £500 case fee for our first ever complaint (which was completely rejected) the FOS refused to communicate at all because the complaint was against the network as far as they were concerned. It smacks of deliberate blindness and, as usual, small firms are treated as being easy targets.

    .

  6. Why, as a member of a network, should we not get 3 free cased per year (rising to 25 in the future)? As network members we pay the same FOS fees as directly authorised firms yet are treated completely differently.

    Treating customers fairly does not spring to mind in this instance!

  7. The premise of the request to make CM companies pay was flawed.

    Claims Management companies are performing a function on behalf of a claimant on the basis of the claimant’s right to do this. You would not be able to make the company pay the fee any more than the claimant.

  8. Bob Riach Riach Independent Financial Advisers 7th August 2012 at 2:12 pm

    Anonymous Claim mangement company reply above

  9. @Anonymous 1.37.

    Your comment would carry greater weight if CMCs were not enabled to peddle their fraudulent scams by misuse of the FOS system.

    The FSA believes that ridding the industry of commission will reduce consumer detriment. Using the logic making CMCs pay a fee would get rid of dubious complaints.

    Finally, consider also the retired adviser who, though not being regulated, does not have even one ‘free case’.

  10. There are some confused people here making no sense whatsoever.

  11. @ Alan Lakey

    Couldn’t agree more.

    It seems that FOS is happy to advocate a system where it profits from fraud.

  12. Bob Riach, because I do not pounce on CMCs or agree with the logic of them to pay the complaint fee, you assume I am a Claims Management company. Apart from not being connected to any such firm, your logic of any sympathy with “x” makes you “x” smacks of the same offensive accusations made by totalatarian regimes. If you can’t construct a valid argument, don’t bother.
    A fee would close the door to some potentially valid claims whether it is the individual or CMC handling it. CMCs are there for people inept at form filling or those who are unwillinto spend the time and effort but willing to pay others to complete the process.
    Alan Lakey, the point you raised is a good argument for the regulation of such companies so that any genuine abuse can be used to fine and stop such companies.

  13. Without long explanation the fact we pay win or lose is against natural justice.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com