We welcome the Financial Ombudsman Service (FOS) consulting on proposals to charge case fees for claims management companies (CMCs) and other professional representatives.
- As the FOS has acknowledged, the current arrangements, whereby the costs fall solely on respondent firms, are inequitable and do not fairly reflect the advent of Claims Management Companies’ (CMC) participation in the consumer dispute resolution ecosystem for financial services.
- Whilst we agree that professional representative firms can add value for customers, the FOS’ own evidence shows that too often such representatives drive significant cost and operational challenges for the FOS and respondent firms without sufficient corresponding benefit for customers, bringing the current system into disrepute.
- We believe that an equitable framework can only be achieved through fee parity for both respondent and professional representative firms, especially those professional representative firms pursuing mass volume claims which FOS’ analysis demonstrates does not, in the vast majority of cases, improve customer outcomes.
- We recognise the risk of CMCs passing on fees to customers. We therefore suggest that measures to prevent fees being passed on to customers are created in conjunction with regulators (including the SRA).
