Article by Elaine Morton, Head of Legal, Conduct Risk & Financial Crime at the BSA

The complaints landscape has changed dramatically since the Financial Ombudsman Service (FOS) was established back in 2000/2001. We’re now in a world where there’s a sizeable commercial industry in complaints against financial services firms. A world where claims management companies (CMCs) and other personal representatives (PRs) profit from bringing claims to FOS, without paying a thing to them for the use of the Service. 

The proposals from FOS to charge a fee of no more than £250 are the latest attempt in a range of measures to curb the poor behaviours exhibited by some CMCs/PRs. Yes, there are many reputable CMCs/PRs that provide a great service helping people navigate the intricacies of making claims and complaints against financial services firms. These are the firms that are meeting the FCA’s expectations that CMCs/PRs should be “trusted providers of high quality, good value services that can help people pursue legitimate claims for redress”. 

We all know however, that there are others that fall very far short of that expected standard, and  continue to tarnish this industry. Those are the rogue firms submitting high volumes of complaints with little or no prospect of success; the ones creating false hope for consumers that they will get a more favourable decision than what the firm being complained of has already offered; the ones taking up the time and resources of financial services firms and the Ombudsman Service.

It’s simply incredible that less than 25% of cases referred to the FOS by CMCs/PRs result in a different outcome for the complainant than the one that the financial services firm has already offered them. 

Charging a fee at all will be a definite step in the right direction in addressing some of this, and we at the BSA wholeheartedly support the principle of fee charging. But we believe that FOS should go further.  If the CMCs/PRs complaint is not upheld, why not charge the full fee (currently £650 for firms) to them? That would certainly help reduce the practice of “weaponising” complaints which currently takes place. Let’s see some real skin in the game for CMCs/PRs!

Whatever the ultimate fee amount is, it will be important for FOS to keep that figure under review and promptly consider adjustments if it does not see the expected outcomes from CMCs/PRs. In addition to the present proposal, we think FOS could provide for enhanced fees for those CMCs/PRs that actively and repeatedly engage in unreasonable behaviour, such as continuing to escalate templated and poorly escalated complaints despite prior warnings.

We also want to see the FOS and other interested parties improve communication to consumers on the use of CMCs/PRs. We need to make sure that those who don’t need to use a CMC or other representative are made aware of that.

Quite aside from making sure that consumers get the right outcome at the right time, implementing FOS’s latest proposals (with some sensible amendments) can only increase efficiency, fairness and transparency in the commercial claims management companies and professional representatives market. 

You can read the BSA's full response to the consultation here