It has always been a cornerstone of the UK’s Financial Ombudsman Service (“FOS”) regime that it is free to access for consumers and other entities who constitute eligible complainants. However, this position will soon change. 

As matters currently stand it is only respondent firms who must pay FOS case fees (whether or not the complaint is upheld). The current case fee is £650, albeit all firms are permitted three free cases per year.

On 21 May 2024, draft regulations were published which will give the FOS the ability to charge fees in respect of complaints brought by claims management companies (CMCs) and legal professionals carrying out regulated claims management activities. 

In support of these changes, on 23 May 2024, the FOS launched a consultation on the detail of the proposed charging structure, which follows an earlier seven-week consultation that ran from 13 December 2023 to 30 January 2024. This looked at whether and how the FOS might best implement a charging regime for CMCs and other professional representatives. The feedback received did show strong opposition from CMCs and other professional representatives – but most consultees overall supported the implementation of a fee regime. The government Policy Note which accompanied an illustrative draft of the regulations published in 2023, shows the proposal has government backing. 

In the latest consultation, the FOS proposes to charge CMCs £250 to lodge a case with the FOS, which will be reduced to £75 if the case is determined in favour of the complainant. The FOS says that if the case is not upheld, the £250 fee will be applied to reduce the fee paid by the respondent firm (indeed, reducing it significantly from £650 to £175). Like respondent firms, they will be allowed three free cases per year. 

For those complainants who bring complaints directly, the FOS will remain free to them. 

Part of the rationale for this change of stance is to reflect the fact that CMCs and other professional representatives can derive an economic profit from submitting case to FOS. It is also hoped that the introduction of fees will deter bad behaviours observed from CMCs, including the submission of high case volumes which are poorly presented and have little prospect of success. Unnecessary escalation to the Ombudsman for final decisions is also reportedly observed. All of this impacts on the FOS’s operational efficiency and costs. Indeed, the FOS observes in its consultation paper that over 20% of cases referred to the FOS over the last two years were brought by commercial CMCs and other professional representatives and, of these cases, fewer than 25% resulted in a different outcome from that which the respondent firm had already offered. 

The FOS’s consultation closes on 4 July 2024, the same day that the General Election is being held. Whilst the consultation envisaged a start date of 1 October 2024 for the new charging structure to be imposed, with the parliamentary recess over the summer plus the potential change in government, the regulations may take longer to be made law than is usual (6-7 weeks) but it is not anticipated that the proposal will be withdrawn.