The introduction of a £250 fee per case for law firms and claims management companies (CMCs) to bring complaints to the Financial Ombudsman Service (FOS) is causing concern among industry professionals.
- The Law Society argues that the fee could make managing volume complaints “unmanageable” for many firms, potentially discouraging legitimate claims.
- A refund of £175 is available for successful cases, and the first three complaints annually are exempt from the fee.
- Despite the refund, the fee remains contentious as it could lead to litigation becoming a more viable option than using the FOS.
- There are calls for alternative measures, such as a helpline, to aid those without professional representation in accessing the service.
The Financial Ombudsman Service’s (FOS) proposal to levy a £250 fee per case for law firms and claims management companies (CMCs) has sparked significant debate within the legal community. This fee is suggested despite a refund offer of £175 if the complaint is upheld, and an exemption for the first three complaints each year. The initiative aims to streamline the complaint-handling process but has raised accessibility concerns.
The Law Society has described the fee as ‘disproportionate’, warning it could make the process of handling numerous complaints impractical for firms without passing costs onto consumers. This situation may ultimately pressure firms into choosing litigation over FOS processes due to cost considerations. It is particularly alarming as a substantial number of firms bring a high volume of cases, potentially reaching into the thousands annually.
Statistical data reveals that while 20% of the 400,000 cases brought to FOS over the last two years were led by legal professionals and CMCs, only 22% were upheld. This is below the service’s average uphold rate of 32%, prompting some to question the rationale behind the proposed fees. The argument stands that the introduction of such fees might abandon the principle of seeking legal redress via ombudsman services as a preferred option before litigation.
The narrative extends to concerns from the Personal Investment Management & Financial Advice Association which advocates for higher fees, potentially up to £450, to prevent frivolous complaints. Yet, this perspective is met with apprehension about undermining the ombudsman’s accessibility. Suggestions to maintain access include establishing a dedicated helpline for unrepresented claimants, ensuring the service remains approachable and effective.
The consideration of adequate support systems for claimants who lack professional backing is becoming increasingly vital. The Law Society insists the accessibility of ombudsman services should not be compromised, highlighting the importance of maintaining the ombudsman as an attractive alternative to court proceedings. The potential for reduced damages under typical legal routes underscores the necessity of preserving accessible, consumer-friendly alternatives.
The proposed fee structure for FOS complaints may inadvertently shift the balance towards litigation, undermining the ombudsman’s role as a feasible legal avenue.
