Case fees causes collapse in number of law firm complaints to FOS

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Complaints: FOS needs fewer files

The number of complaints to the Financial Ombudsman Service (FOS) brought by law firms and claims management companies (CMCs) has collapsed in the wake of the new case fee, figures have shown.

The £250 fee was introduced on 1 April and, between July and September, ‘professional representatives’ (law firms and CMCs) accounted for 4,300 cases, compared to 37,100 in the same period last year.

The FOS reported that professional representatives have also withdrawn or abandoned “a large number of cases”.

This meant that the FOS received 46,300 new complaints in total in the quarter, 37% fewer than a year before. It upheld a third of complaints resolved in the quarter, with current accounts the most complained-about product.

The number of complaints brought over motor finance mis-selling in the quarter was 2,200, compared to 9,500 in 2024, reflecting both the case fee and the Financial Conduct Authority’s complaint-handling pause while it planned the redress scheme to follow the Supreme Court ruling.

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 FOS has said the 10-case threshold should mean that four in five professional representatives would not incur a fee, based on previous years.

Professional representatives are also waiting to hear the outcome of a FOS consultation that closed last month which aims to simplify its billing processes.

It proposed moving from free cases to a monetary allowance and expanding ‘billing quarterly in advance’ to a larger group of businesses, including professional representatives.

A monetary allowance would be fairer to professional representatives, the FOS said, “as it ensures that all representatives receive the same free case value. At present, case fees vary depending on the outcome of the case.

“This means that the ten free cases may be worth different amounts to different representatives. Our plan to offer a monetary allowance will ensure all representatives receive the same benefit, regardless of the outcome of the case.”