Apfa renews calls for CMCs to pay Fos fee

The Association of Professional Advisers has called on the Financial Ombudsman Service to force all claims management companies submitting claims to pay a fee.

In its response to the Fos’s plan and budget for 2014/15, Apfa said it welcomes Fos’s decision to keep its levy, standard case fee and the number of free cases at the same levels as last year, but said CMCs need to contribute a “fair share to the provision of the service”.

Chris Hannant, Apfa director general, said: “We fully support the right of customers to make a complaint when they have suffered financial loss, and recognise that CMCs can provide a useful service.

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“CMCs make substantial amounts of money from what should be a free service to consumers.

“Therefore, we think they should be obliged to make some contribution to the cost of that service, rather than it being borne in full by the financial services industry.

“Introducing a fee should also encourage a more careful validation process before claims are submitted, rather than the scattergun approach we’re hearing about now.”

Mr Hannant added there is a “precedent for this working elsewhere”.

He said: “Last year the Ministry of Justice introduced fees for certain employment tribunal cases – and part of the rationale was to transfer some of the cost burden from taxpayers to those using the system. Since then, the number of claims brought has fallen sharply.

“We want to see Fos take a similar approach to its fees. It will discourage frivolous and in some cases fraudulent claims, and ensure the cost burden is allocated appropriately.”

This follows on from a meeting held in January between Apfa and the Fos in which Apfa proposed that CMCs should be forced to pay a non-refundable fee when submitting a complaint to the Fos, which would be returned if the complaint turns out to be valid.

In an email update to members, Apfa said it will press the Financial Conduct Authority and the Fos to adopt this measure.

Fos should remain free to use for the public but CMCs who use it for their own commercial ends should have to pay, Neil Liversidge, Apfa council member and managing director of West Riding Personal Financial Solutions, previously told FTAdviser.

A spokesperson for Fos previously said: “We have regularly said that we do not believe charging claims managers would prevent claims being made, as inevitably those costs would be passed on to consumers.

“Additionally, the number of frivolous and vexatious complaints that are made to the ombudsman by claims managers remains incredibly low.”