The Financial Ombudsman Service (FOS) is planning to hike case fees for complaints about financial products and services by £100 to £650 from April 2020. At the same time, it is planning to double the levy it charges firms, up overall by £60 million to £108 million.
The increase marks a move by the Ombudsman towards generating a greater proportion of its income from the levy. In 2020 it will move from 85% of its income generated by case fees and 15% by the levy to 60% case fees and 40% levy. Its long-term aim is to reach a 50:50 funding split between case fees and the levy.
The FOS is also planning to slash the number of ‘free’ complaints that can be made against firms before they are charged case fees, down from 25 to just 10 each year. Larger firms which are part of the FOS’s ‘Group Fee’ arrangements will see their number of free cases cut from 125 to just 50.
The Ombudsman says it expects to handle 245,000 cases in 2020-21, a reduction of 20% over the prior year as the number of Payment Protection Insurance (PPI) complaints reduces. Of these it expects 100,000 to be PPI complaints and 145,000 to be about other financial products and services. The deadline for starting a new PPI complaint was August 2019.
“The FOS is clear that some businesses will pay more in case fees next year than they do at present, but argues that there are protections for firms which only generate a small part of its workload,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “The key however, is for firms to address any issues before they turn into formal complaints. This will not only help with case fees but will also make them a more attractive proposition for professional indemnity insurers. Insurers will reserve their best rates to firms practicing in lower risk areas with the best claims records,” he added.
Brunel secures competitive professional indemnity insurance cover for financial services professionals. To find out more visit the Brunel website or call Mark Sommariva on 0203 475 3275.