THE Financial Ombudsman (FOS) has commenced charging professional representatives for case referrals.
The service remains free for consumers.
According to FOS, 47% of complaints brought to its attention between April and December 2024 were from professional representatives.
In recent years, a significant number of complaints submitted to FOS have been driven by Claims Management Companies (CMCs) who either charge consumers a fee or take a percentage of any compensation awarded. Unlike financial service firms, who are required to pay a £650 case fee for complaints against them, professional representatives do not currently pay a case fee.
The move is part of an effort to stop an avalanche of cases to FOS – particularly around motor finance – without constructing a sound case.
“We've seen more cases brought by professional representatives, but fewer of these cases leading to a better outcome for their clients. Currently there is little commercial incentive for representatives to ensure the complaints they bring are well-founded or have merit. As a not-for-profit service, we expend our finite resources handling thousands of withdrawn or abandoned cases, which can lead to longer wait times for other customers.”
Stephen Haddrill, Director General of the Finance & Leasing Association said the introduction of charging was an important step forward, but was not enough for CMCs.
“CMCs are major businesses that should not have a free ride, not least because they have driven a compensation culture that damages investor confidence in the UK and threatens growth. However, today’s decision on the level of the charge is unsatisfactory and we will continue to call for it to be increased,” he said.
FOS said CMSs would be able to bring 10 cases to the service for free each financial year, but would subsequently charge the £250 fee, which begins from April.
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
