Advisers, insurers and other financial services firms will be refunded £175 if a complaint taken to the Financial Ombudsman Service (FOS) is not won by the claims management company (CMC) submitting it.
The effective rebate is being proposed by the FOS as it revealed it expects to earn around £3m from fees charged to CMCs and other professional representatives in the 2025-26 financial year.
CMCs and professional representatives are proving a continually increasing strain on personnel and financial resources at the ombudsman and the fees are needed to cover their demands.
As part of its budget consultation, the FOS noted that almost half the complaints being received this financial year are brought by such organisations – up from 19% this time last year and 10% in 2022/23.
In real terms, these cases have doubled from 37,592 in 2023-24 to a projected 74,250 this year, which itself is up from the previously forecast 56,250. For 2025-26 a total of 89,100 CMC-led cases is forecast.
£3m income from CMCs
The £3m expected income was announced for the first time by the ombudsman as part of its budget plans for the next financial year.
This will be generated by £75 being retained by FOS through each case submitted by a CMC and professional representative it handles.
Plans for CMCs and professional representatives to be charged £250 per case after the first 10 have been awaiting Parliament and Financial Conduct Authority (FCA) approval, but this is expected to be completed in time for the new financial year and so is being factored into the annual budget.
If the case is successful the CMC will receive a £175 refund with the FOS retaining the remaining £75.
In contrast, respondent firms facing the complaints will receive a £175 rebate on their £650 case fee if the complaint is not upheld by the FOS, again the arbitrator will keep the difference.
Case fees of £650 are charged to respondent firms after the first three cases received by the FOS.
The FOS again emphasised that complaints entered directly by consumers, not‑for‑profit advice services, charities and informal representatives such as friends and family would attract no case fee for submission.
There was no mention in the consultation of advisers, insurers and other respondent firms being required to pay case fees upfront, as was suggested last month.
However, the FOS noted: “In anticipation that the implementation of our data strategy – which is currently in progress – will support robust data points that could be used for more sophisticated billing in future years, we have included investment in the 2025-26 transformation budget to implement an updated billing system.”
Parliament approval
“An estimated income of £3m for charging professional representatives has been included,” the FOS said.
“At the time of publishing this consultation we have not yet made final rules because the Statutory Instrument has only recently been approved by Parliament.
“We anticipate publishing a full policy statement setting out our final decision, final rules and a proposed implementation pathway, as soon as we can, subject to consent being obtained from the FCA.
“To provide clarity to consultees, we think the inclusion of income from charging professional representatives is the most reasonable basis on which to consult on our plans and budget for 2025/26,” it added.
