Lord Hunt has recommended the Financial Ombudsman Service introduces a case fee for vexatious claims put forward by claims chasers and called for a crackdown on the way they advertise.
But despite calls from many advisers, Lord Hunt’s report, released today, states he does not believe a consumer fee or an appeals mechanism should be introduced.
He also rejected calls for case fees to be paid only by advisers who lose the case against them, despite the recent County Court Pickering ruling which suggested the FOS was unfair to charge advisers whose claims were rejected.
The report says: “The dangers of making a radical shift to outcome–related case fees, sometimes referred to as “polluter pays” funding would outweigh the putative benefits.”
He recommends case fees should not be paid if the case is found to be outside the FOS’s jurisdiction and that a higher case fee should be charged for “enforced deadlock” cases.
The Hunt Review is also calling for the FOS to award a “wooden spoon” for the worst performing firm in terms of uphold rates in retail banking, investments, general insurance, intermediation in investments and intermediation in general insurance.
The report is proposing that the ombudsman service change its branding to a more “user friendly” name such the Financial Complaints Service in order to convey its activities to the public more effectively.
The report also hits out at the Financial Services Compensation Scheme, with Lord Hunt stating his “surprise” that the FSCS sees it fit to reinvestigate cases where the FOS has found against a company that has subsequently gone bankrupt without paying the compensation.
The report calls on the FOS to put pressure on the Government to improve the advertising standards of claims chasing firms.
The report says: “The FOS should press the claims management regulator operating under the aegis of the Ministry of Justice, in close consultation with the Advertising Standards Authority, to insist that advertising by claims management companies makes clear the level of charges faced by consumers and also the fact that the FOS service itself is available free of charge.”
The review also recommends that the base of FOS levy-payers be expanded to include regulated claims managers.
Hunt says the FOS should ensure decision letters always contain the proposed amount of compensation, rather than a formula and the FSA should include the FOS logo on the letterheads and websites of authorised firms.