December 8, 2021

Volume XI, Number 342

Advertisement
Advertisement

December 08, 2021

Subscribe to Latest Legal News and Analysis

December 07, 2021

Subscribe to Latest Legal News and Analysis

December 06, 2021

Subscribe to Latest Legal News and Analysis

FOS Announces Fee Hike In 2020 Because Of More Complex Cases

The Financial Ombudsman Service (“FOS”), the body responsible for resolving disputes between consumers, smaller businesses and financial services firms, has announced plans to increase its levies and case fees in 2020.

The FOS’ latest plan and budget consultation reveals proposals to increase its case fee (paid by firms) by £100 from £550 to £650. It will also double its levies from around £46 million to £106 million in 2020. The case fees count for 60% of the FOS’ funding while the levies make up to around 40%.

This follows the restructure that the FOS underwent in 2016 in order to futureproof the agency against it’s over reliance on fees generated by PPI complaints. A recent whistleblower allegation published in The Guardian claimed the FOS was heavily reliant on PPI complaints subsidizing the cost of general casework, which could result in a future funding issue for the FOS as PPI complaints start to reduce.

The FOS explained that the changes should ensure it operates “effectively in light of the considerable uncertainty and volatility we expect to continue to experience – against a backdrop of a smaller, but more complex future caseload. We also suggested that our funding arrangements should better reflect the wider value our service brings to the financial services sector, in terms of preventing complaints and encouraging fairness.”

Increasing number of complicated cases

The FOS expects nearly 250,000 more complaints next year and has said that the disputes it handles are becoming more complex. The majority of complaints will still likely be related to wrongly sold PPI. Although, with the deadline to file these complaints having passed earlier this year, the FOS believes the end is in sight for dealing with these complaints.

The FOS confirmed that it expects complaints about pensions and investments to reduce by a couple of thousand to around 13,000 a year. It says that it has also seen a rise in complaints about self-invested personal pensions (“SIPPs”). The FOS also noted that a far higher than expected amount of SIPPs are being upheld, supporting “the broad trend toward complexity that we’re seeing across our casework, many of these complaints are hard-fought, subject to ongoing legal action, and in some cases involving firms that have gone into liquidation – factors which create challenges around reaching a quick resolution.

Impact on firms

The Association of Financial Mutuals estimates that firms will have to pay double their existing levy to the FOS. It also believes that small firms may end up unfairly penalized. Currently, firms are allowed 25 free cases and pay a case fee thereafter. Under the new plans, smaller firms will only be allowed 10 free cases, in addition to grappling with the increased case fee.

If you are interested in finding more information about the FOS future strategy for 2020/2021, you can access its consultation report here.

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume IX, Number 354
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Garon Anthony Litigation Attorney Squire Patton Boggs Birmingham, UK
Partner

Garon is a partner in the Litigation Practice Group. He advises clients across the full range of commercial dispute issues, including cyber liability/data breach, professional negligence, banking, pensions and insurance.

Garon regularly acts for clients who are subject to investigations or disciplinary proceedings by national and international regulators, including most recently the Financial Conduct Authority, the Financial Reporting Council and the Dubai Financial Services Authority.

Related Services

  • Litigation
  • Data Privacy & Cybersecurity
  • ...
44 121 222 3507
Rose Chaudry, Squire Patton, Commercial Litigation Lawyer, Tortious Contracts Attorney
Associate

Rose Chaudry is an associate in the Litigation team with expertise in general commercial litigation. Rose qualified in September 2015 after completing her training contract with the firm.

Rose regularly acts for a diverse client base, including individuals and companies, from SMEs to PLCs. Rose has experience advising on a wide-range of matters of both a contractual and tortious nature, including breach of contract, breach of warranty, debt recovery, professional negligence and insurance.

44 121 222 3146
Advertisement
Advertisement
Advertisement