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Home > Regulation > UK Regulation

Fos to increase fee-free case allowance to 25

Ombudsman stops short of levying fees from claims management firms, saying the costs would be borne by consumers.

By Michael Trudeau | Published Aug 07, 2012 | comments

The Financial Ombudsman Service is pushing ahead with plans to increase the number of fee-free cases from three to 25 after hearing feedback from the financial services industry.

In a statement published today, the Fos said a “large majority” of stakeholders supported increasing the free case threshold to 25, with the largest businesses saying calling for the threshold to apply equally to all businesses.

The Fos said: “In light of this feedback, we intend to proceed with our proposal to increase the free case threshhold to 25, and we will include this in our proposed funding arrangements for 2013/2014.”

Previously, advisers have complained of having to bear crippling fees, as a firm must pay £500 for each complaint beyond the fifth each year, regardless of size or if it upheld.

This is an especially sensitive topic as the number of complaints from claims management companies grows.

Although the Fos did not say it plans to change its levy in reflection of the new case fee arrangements, it did say it is “discussing with the FSA what this might mean for the levy in future years”.

According to the ombudsman, a “significant minority” of respondents called for the introduction of fees paid by claims management companies, arguing that claims managers should contribute to the costs of the ombudsman service.

However it dismissed the idea, saying it was not “the right way forward”.

“We do not believe such a requirement would address the underlying issues in the claims management sector, not least because the costs would ultimately be borne by consumers themselves.”

Rather, it emphasised the need for better regulation of the claims management sector and called for “better prevention of ‘mass complaints’ at source”.

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