A broker's claim that directly authorised intermediaries could have to pay thousand of pounds in case fees under the Financial Ombudsman Service's transitional complaints system has been dismissed as “scaremongering”.
This comes in response to an exclusive story in Mortgage Strategy on January 12, where Brian Lentz, principal at Portfolio Insurance Consultancy & Mortgage Broker, said directly regulated brokers would have to pay a non-refundable £360 case fee.
He pointed out that brokers who leave the MCCB before regulation and join a network would be exempt from this system – as stated in the Treasury's consultation paper on transitioning complaints – while complaints about post-regulation cases would be covered by the network.
But Steven Thompson, director of Ultimate Compliance Services, says: “This is scaremongering. Under the current arbitrator, MCAS, the initial case fee is £800 plus and £265 thereafter. If brokers have that many complaints, no network would want them anyway. Also, the FOS is proposing to investigate the first two complaint cases per firm at no cost.”
However, Lentz insists this is a reality check for those about to decide which authorisation route to take. He says: “The current MCAS situation is different from the FOS transitional arrangements. MCAS is an arbitration service whereas the FOS makes up its own rules and answers to nobody, including the FSA.
“A firm can refuse an MCAS preliminary hearing and opt for a full hearing on any case where it feels there is no case to answer but we will be denied this as the FOS states in its own leaflet.”