The Financial Ombudsman Service (FOS) will introduce a £250 charge for claims management corporations from April in a bid to complaints which might be well supported.
Currently, the FOS says there may be “little business incentive” for these firms to bring forward only strong cases.
Between April and December last yr, skilled representatives accounted for 47% of complaints submitted to the ombudsman. Nevertheless, only 26% of those cases were upheld in favour of consumers, in comparison with 38% of complaints brought directly by individuals without spending a dime.
James Dipple-Johnstone, deputy chief ombudsman on the FOS, noted: “We have seen more cases brought by skilled representatives, but fewer of those cases resulting in a greater final result for his or her clients.”
The FOS, which resolves disputes between consumers and financial firms, will remain free for people submitting cases themselves, in addition to for those assisted by family, friends, charities, or voluntary organisations.
Under the brand new rules, skilled representatives can submit as much as 10 cases per financial yr at no cost. Beyond that, they might be required to pay £250 per case. If a criticism is upheld in favour of the buyer, the firm will receive a £175 refund, reducing the web charge to £75.
Currently, financial businesses pay a £650 fee for complaints investigated by the FOS, while claims management corporations face no charge. Under the brand new system, if a case brought by knowledgeable representative is just not upheld or is withdrawn, the financial firm involved pays a reduced case fee of £475 as a substitute of the usual £650.
Commenting on the announcement, Stephen Haddrill, director general of the Finance & Leasing Association said: “The introduction of charging is a most significant step forward. CMCs are major businesses that mustn’t have a free ride, not least because they’ve driven a compensation culture that damages investor confidence within the UK and threatens growth. Nevertheless, today’s decision on the extent of the charge is unsatisfactory and we’ll proceed to call for it to be increased.
“Skilled representatives must be charged on the identical basis as lender firms to deliver a good and equitable approach. And the suggestion that lenders must pay the lion’s-share of the £475 case fee even once they will not be at fault runs counter to FOS’s aim of applying a ‘polluter pays’ principle. We all know of no other example where the loser in a case involving two businesses pays lower than the winner.”
This Article First Appeared At www.am-online.com
