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Chris Cummings, director general of the Association of IFAs, has challenged the Financial Ombudsman Service to change the way it charges IFA firms.

In the wake of Wiltshire-based IFA Heather Moor and Edgecomb Limited’s landmark victory over case fees at Trowbridge County Court earlier this year, the director general of Aifa publicly condemned the Fos' charging structure.

Mr Cummings said: “My heart goes out to Brian and Dolly Pickering and they are caught in the middle of a structure that needs changing."

He added that the Fos' charging structure contradicted its original aim and saw IFAs pay a disproportionate amount of money, compared with other industries. He said: “The Fos was set up as a dispute resolution service and now it has become a semi judicial process. Instead of being an arbiter, the Fos is actually becoming an advocate - which is entirely unlike the rest of Europe."

"I am very clear about the case fee system not working. The Fos received 115,000 complaints last year. The majority of complaints were about banks and not about IFAs. We generate 70 per cent of financial services business and we get 12 per cent of cases, of which we lost 3 per cent. So in the vast majority of cases, the IFA firm is found to have done nothing wrong, yet we still have to pay a case fee.

"To pay a £450 case fee and then be told you have done nothing wrong is not a system I feel comfortable with."

Meanwhile, Mr Pickering, managing director of HME, questioned the impartiality of the Fos' complaints filtering process. He said: "I am convinced that the Fos has no proper filtering process of a claim - for its validity- and whether it is vexatious, blatantly 'economical with the truth' or invalid."

Echoing this view, Mr Cummings said potential fraud cases could be rife in the Fos. He said: "When people fib and start to bring vexatious cases forward, what Aifa would like to see is the Fos charging them for being frivolous. Our challenge to the Fos is to collect the data and tell us how many complaint cases are of a vexatious nature, including people attempting to commit outright fraud. The Fos has the power to do it today - it has never done it."

Aifa is due to publish a review of European regulation and the lessons that can be learned from other member states in September.