View more on these topics

Hunt rejects calls to end ‘unfair’ case fees

The Hunt review of the Financial Ombudsman Service has dismissed widespread demands for advisers to pay a case fee only if a complaint against them is upheld.

Lord Hunt says reforming the current system of case fees, such as by introducing a “polluter pays” scheme, would introduce its own problems.

The report claims that the dangers of shifting to outcome-related case fees would “outweigh the putative benefits” as such a structure would reduce the incentive for adviser firms to investigate complaints adequately.

Hunt says: “Why invest heavily in your own dispute resolution service if you can simply pass the work to the FOS, secure in the knowledge that you will face no charge for the cases which you win?”

The report says the incentives for the FOS would be “equally odd”. Hunt says: “If the organisation’s cashflow and ultimate survival depend on a flow of guilty verdicts, there is a danger of economic incentives having an impact on decision-making that would be highly inappropriate.”

This comes despite the recent ruling in the county court which suggested that the FOS was unfair to charge advisers for rejected claims – a ruling the FOS is appealing and that Hunt acknowledges in his report.

The review also warns against introducing charges for consumers who make complaints. Hunt says he doubts whether many vexatious complainants would be deterred and proposes a greater focus on clear and transparent filtering rather than a blanket imposition of fees.

The report also recommends that the FOS should introduce a higher case fee for “enforced deadlock” cases from 2009-10.

Hunt says: “I do believe there is a strong case for penalising firms which, whether by deliberate decision or through plain incompetence, drag out the initial stages of complaint handling to the detriment of the customer and thereby generate additional costs for the FOS.

“It would be relatively easy to introduce a higher case fee for cases where a firm has failed to meet its obligation under Disp to issue a final response or a letter indicating when it expects to issue a final response in the initial eight-week period.”


Re-reg gets boost as IMA backtracks on IT

The Investment Management Association has dropped its call for fund firms to adopt an international standard for electronic messaging this year.

Matcher points

HSBC’s five-week rate matcher offer to all UK homeowners could see the bank suffer- ing huge service problems.


Guide: reporting to the Pensions Regulator — what and when?

Johnson Fleming has published a step-by-step guide demonstrating the importance of record keeping and reporting, and how it can ensure you operate a successful scheme. The guide takes you through some key questions you need to ask and identifies the information you need to obtain. The topics include: why you need to keep records and the benefits of doing this; registering your scheme; what information you need to record to ensure you meet the Pensions Regulator’s requirements; and what items need to be recorded and when.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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