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FOS proposes boosting the number of free cases from 3 to 25 in 2013

The Financial Ombudsman Service has today revealed that it’s looking to boost the number of free cases businesses are allowed from three to 25 in 2013 as it prepares to tackle a flood of payment protection insurance complaints over the coming year.

The aim it says is to insure that in the future only 1% of businesses pay any case fees.

For the coming year it will continue to charge businesses only for the fourth and any subsequent complaint each year– so that three quarters of businesses with complaints referred to the ombudsman service again payno case fees.

It will also continue to charge in 2012 a supplementary case fee of £350 for each PPI mis-selling case referred to the FOS.

But this is chargeable only when businesses have more than 25 of these cases a year, reflecting where the costs are actually incurred in sorting out PPI mis-selling on this scale.

Make Claims Firms Pay
Mortgage Strategy’s campaign Make Claims Firms Pay is designed to lobby the government to change the rules surrounding claims firms – to have your say, make sure you vote on our e-petition

Mortgage Strategy set up a government e-petition in September last year as part of our campaign Make Claims Firms Pay, after numerous mortgage brokerages complained that they had been deluged with bogus complaints.

As well as proposing to boost the number of free cases from three to 25, it’s also looking to develop a new group arrangement to more accurately accurately reflect the total costs to the FOS generated by the 10 financial services groups that generate over 70% of its complaints workload.

These new proposals for 2013 come as FOS consults on ways of dealing with what it predicts to be a record year for complaints in 2012.

The FOS says its on track to have dealt with some 1.2 million consumer enquiries in the current financial year and it says this is set to increase to 1.4 million next year. Of these it’s anticipating totake on 285,000 new cases, up from 259,00 in the current financial year – a 25% increase on the previous year.

It’s also anticipating to settle more disputes involving mis-sold PPI than ever before – a record 130,000 cases, which is half of its expected workload.

Tony Boorman, principal ombudsman at the FOS, says: “A year after the High Court ruling gave us legal finality on the approach that financial businesses should take on PPI complaints, it’s disappointing that there’s little finality for significant numbers of consumers who are still waiting for their bank or insurer to deal with their complaint.

“The delays and inconvenience that this causes consumers means the ombudsman now has to gear up for unprecedented demand and volatility in our workload.

“Our proposals to make sure we have the operational capacity to handle record volumes of cases involve those businesses who account for these complaints contributing the most to sorting out the problems.

“But in these difficult economic times – when consumers and businesses alike are tightening their belts and facing uncertainties – this is not welcome news for anyone.”


Coventry offers ERC-free letting deals

Coventry Intermediaries has launched a new range of mortgage products, including some five-year buy-to-let deals with no early repayment charges. The lender is introducing a buy-to-let five-year fix at 5.35%, which is available up to 75% LTV with a £250 booking fee and £999 arrangement fee, and no ERCs.It is also offering the same product […]


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  • GMS 10th January 2012 at 10:32 am

    Clearly the problem of ambulance chasers has been addressed in the increase of free cases. Whilst this to me seems to be the wrong way of dealing with the issue, at least it has been addressed in some small way.

    However this will not stop the claims companies who have nothing to lose by submitting cases. I think we all agree that there needs to be a right to make a complaint and putting barriers in the way of this would be the wrong thing to do. Having said that we cannot continue to allow an innocent party to be held liable for costs. There are enough ‘No win, no fee’ companies out there who will submit claims galore. Until there is a financial disadvantage to this it will continue.

    How about a ‘No loss, no fee’ agreement between the adviser and the FOS? No free cases, just a situation where you will not pay for winning a case. Once a case has been proven to have no foundation the broker could then apply for the costs to be covered by the claim company for which the FOS could make the ruling.

    At a stroke this would prevent spurious claims by the ambulance chasers and lay the liability for the cost firmly at the door of the party who lose. FOS costs would be reduced as there would be much less work involved.

    Seems to work well in every other industry, why should we be any different.

  • Toddy 6th January 2012 at 11:00 am

    As more and more firms are becoming ARs of networks, I think the funding model needs to reflect this. Currently ARs have got no free cases. Each AR should at least have one free case and this should be addressed before giving DAs more.

  • Bob Riach Riach Independent Financial Advisers 6th January 2012 at 10:40 am

    I have just been informed that the position for network members will remain the same, i.e. that the network is classed as one business as a whole.

    Its easer for the Regulators to monitor Network Member via the Networks so why should the Network Member Businesses not have Free Cases

  • Bob Riach Riach Independent Financial Advisers 6th January 2012 at 10:26 am

    Ref comment by Anonymous | 6 Jan 2012 10:12 am

    I have had several complaints over the years they were all rejected by FOS however I still had to pay.
    Just because you get a complaint this does not mean you are a bad adviser. Many of these complaints are brought about by unscrupulous complaint companies that advertise in the Media.
    The last complaint I had was from a client complaining about his fixed rate mortgage saying that he would have been better staying on a variable rate my initial advice was well documented abd FOS rejected the claim BUT I still had to pay over £500

  • Luke Atkinson 6th January 2012 at 10:23 am

    Or would the funding be better directed at taking legal action against ambulance chasers that make spurious claims?

  • alick 6th January 2012 at 10:12 am

    would the funding be better directed at reducing the levy of those firms that have not received any complaints?

    This is rewarding failure, and will only benefit those firms with a history of volume targeted sales agendas.

  • Bob Riach Riach Independent Financial Advisers 6th January 2012 at 10:12 am

    Will this be free cases per registered individual if you are a Network Member or is the Network classed as one business as a whole.

    I had a mortgage case last year that was rejected by FOS, however Sesame still deducted over £500 from me