Claims firms responsible for nearly half of FOS cases

Claims management companies accounted for almost half of all cases received by the Financial Ombudsman Service during 2011.

Figures cited in a review of FOS by the National Audit Office last week show claims firms generated 45% of complaints to FOS last year, compared with 43% that came directly from consumers.

The number of complaints referred by claims firms to FOS is up by 17% on 2010, when 28% of cases came through claims firms, and by 27% since 2007, when claims firms accounted for 18% of cases.

The bulk of cases generated by claims firms last year related to payment protection insurance complaints.

The NAO review also notes that FOS operating costs have risen 214% in real terms over the last nine years from £27.2m in 2001/02 to over £100m in 2010/11.

Last September Mortgage Strategy set up a government e-petition as part of its Make Claims Firms Pay campaign, following numerous complaints from brokerages that they had been deluged with bogus complaints. The e-petition has so far gained almost 500 signatures.

The audit also revealed that FOS is falling short of its target to resolve half of cases within three months, with only 41% of last year’s cases resolved within this time.

The NAO recommends FOS should do more to understand the reasons for delays in the complaints handling process and work out the number of cases staff can work on at any one time.