Dipple-Johnstone: More agile system
The new case fee for complaints to the Financial Ombudsman Service (FOS) brought by law firms and claims management companies (CMCs) is already having an effect, it said today.
The £250 fee was introduced on 1 April and, in the three months after, FOS processed 68,000 complaints, 6,600 (or 9%) fewer than the same quarter in 2024 – most of the drop was due to fewer complaints lodged by ‘professional representatives’ (law firms and CMCs).
Unveiling the figures today, the FOS said the fall was “particularly significant” across areas where law firms and CMCs have been active, such as irresponsible and unaffordable lending, which have more than halved to 10,000 new cases.
Similarly, the most complained about issue – motor finance commission – dropped from 36,000 cases in April to June last year to 21,500 this.
In total, 30,800 cases were brought by professional representatives, compared to 36,600 last year.
A professional representative can bring 10 cases for free each financial year but is charged £250 for each one thereafter. If the outcome goes in favour of the complainant, £175 is credited to the representative.
If it does not, the case fee for the financial business the complaint was made against is reduced from £650 to £475.
There is a statutory exemption for charities, family members and free advisory organisations, while the FOS remains free for complainants who come to it directly. The Financial Conduct Authority (FCA) has been stressing this in relation to motor finance claims in the wake of last week’s Supreme Court ruling.
The FOS has said the 10-case threshold should mean that four in five professional representatives would not incur a fee, based on previous years.
The service said today that the next set of quarterly data would likely show even fewer complaints brought by professional representatives.
“Prior to charging, we saw a high proportion of withdrawn and abandoned cases brought by professional representatives; however we anticipate that this will drop over the next few months as representatives bring better-evidenced complaints to the service.”
Following work done by the FOS and the FCA, HM Treasury last month issued a consultation on changes to the way the service operates.
Key reforms include an adapted ‘fair and reasonable’ test, meaning that the FOS will be required to find that a firm’s conduct is fair and reasonable where it has complied with relevant FCA rules, along with a framework which formalises the roles of the FOS and the FCA in providing regulatory certainty.
Where there is ambiguity in how the FCA’s rules apply, the FOS will be required to seek a view from the FCA.
James Dipple-Johnstone, the FOS’s interim chief ombudsman, said: “Following a year of extraordinary demand, we recently announced reforms to modernise the UK’s redress system, making it more agile and responsive and a much better fit for today’s economy.”
