From April 1, the Financial Ombudsman Service (FOS) has begun charging third-party claims firms a fee for passing complaints.
A huge banking rule change could cost YOU £250 extra, bank account holders up and down the country have been warned. From April 1, the Financial Ombudsman Service (FOS) has begun charging third-party claims firms a fee for passing complaints.
You can complain to the FOS about regulated financial services firms, and claims management firms (CMCs) can help people to make a claim. They do this in return for a cut of their compensation.
This is currently capped at 30% of the payout for firms regulated by the City watchdog. Now, the FOS has decided to levy a £250 charge for every case put forward by a claims firm from April 1.
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If the case is successful, they will receive £175 back, so they only pay a £75 fee. At the same time, the fee financial services firms pay will be reduced to £475.
The FOS explained: “A large proportion of complaints referred to us in recent years have been driven by professional representatives who either charge consumers or take a percentage of any redress awarded.
“Currently, financial service firms pay a £650 case fee for complaints against them that we investigate, while professional representatives do not pay a case fee.
“Under the new rules, if a complaint referred by a professional representative is not upheld or is withdrawn, the financial business against whom the complaint was made will pay a reduced case fee of £475, instead of £650.
“The move aims to make the funding arrangements for us fairer and to encourage professional representatives to submit better-evidenced complaints, considering their merits more diligently before referring them.”
Claims firm Johnson Law Group said: “All this does is price out legitimate consumers and encourage delay and obfuscation.” In a consultation response, the Money Advice Trust added: “We are concerned that disreputable CMCs could mislead consumers by suggesting that there is a fee to make a complaint irrespective of who makes the complaint.
“This could result in consumers using CMCs because of misinformation about free access routes.”