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Tories call for complainants to pay FOS fee

The Conservatives are calling for complainants to the Financial Ombudsman Service to pay a refundable up-front fee in a bid to halt the number of unnecessary cases taken against IFAs.

Anyone making a complaint to the FOS does not have to pay a fee while the IFA has to pay a case fee of 360 regardless of whether or not the complaint is upheld although they are given two free claims.

Conservative Shadow Treasury minister Richard Spring says this encourages a complaint culture with IFAs having to pay a penalty even when they have done nothing wrong.

Spring says IFAs are being placed under unwarranted pressure by an unbalanced procedure that leads to many people complaining without good reason, knowing they have nothing to lose.

Under the proposals, an initial fee would be paid by the complainant. The fee would be refunded if the complaint was upheld.

The FOS estimates that 108,000 complaints will be made by the end of this tax year, with only 30-40 per cent being upheld.

The case fee is only waived if the complaint is found to be “frivolous or vexatious”.

The plan is part of a paper aimed at reforming the regulation of the financial services industry. Other recommendations include a new competition remit for the FSA, an independent board of directors for the FSA and a moratorium on EU directives. The paper was written by Spring and endorsed by Shadow Chancellor Oliver Letwin.

PMI Independent Financial Advisers director John Stewart says: “What a great idea. This seems extremely logical, reducing the amount of time-wasters while allowing people with genuine grievances the right to complain.”

Cicero account director Mark Twigg says: “A moratorium on EU directives simply will not happen. This recommendation flies in the face of the reality that we have to work constructively with Brussels to get the best deal for UK plc.”

Have you say in the debate by clicking the link and taking part in our straw poll:

http://www.moneymarketing.co.uk/poll/poll19.html

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