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Judge rules against FOS over “unfair” case fees

A County Court judge has ruled the Financial Ombudsman Service is wrong to charge an adviser a case fee when the case is rejected by the FOS.

Judge Rutherford of Trowbridge County Court last week ruled the way the FOS forces firms to pay the costs of dealing with a complaint when that complaint is rejected is “unfair in principle and in practice”.

He said: “No reasonable public body would maintain and enforce such a rule.”

Although County Court rulings do not set precedents, the judgement will be seen as embarrassing for the FOS. It is appealing against the ruling.

The FOS had brought a case against a small Wiltshire-based IFA for refusing to pay four case fees of £360 each.

Heather Moor & Edgecomb Ltd had refused to pay the fees as a way of challenging the FOS’s practice of charging firms a fee even when a complaint against them is rejected.

Heather Moor & Edgecomb founder Brian Pickering says: “We just thought it very unfair that someone can make a complaint and even if it is found to be groundless we are made to pay. We believe in fairness. We couldn’t just hand the money over. At some point you have to stand up for what you believe in.”

FOS was also ordered to pay £2727.55 in the costs wasted as a result of it failing to obey the Judge’s directions and a hearing on May 7 2007 having to be abandoned and £75 expenses to Mr Pickering.

FOS spokeswoman Emma Parker says the ruling does not alter the legal requirement on all other businesses to pay case fees to the ombudsman service, where appropriate.

She says: “However, because it touches on some wider issues about how we’re funded, we will be appealing the case.”

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