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The financial Ombudsman (FOS) has frozen the fee it charges firms to deal with complaints at £500 for the second consecutive year.
Firms must start paying the fee for every case referred to the Ombudsman by consumers beyond the three free case limit.
The FOS generates about 80% of its operating income from case fees.
It has also frozen at £20.5m the amount it will raise through levies in 2011/12.
However the service has warned firms to prepare for an industry-wide additional levy of £25m to deal with soaring complaints about payment protection insurance (PPI).
The levy, raised and collected by the FSA, will fall on the "compulsory jurisdiction". This includes all firms authorised or registered by the FSA, including those which have not had any cases referred to the Ombudsman service.
In January, FOS warned the decision among some firms, including large high street banks, not to pay up when receiving an unfavourable ruling over PPI could cripple it "in six weeks".
Many PPI sellers are refusing to co-operate with the FOS until the outcome of a judicial review into PPI mis-selling by the British Bankers Association (BBA). This includes paying the case fees which make up 80% of the FOS' income.
The FSA has approved FOS' operational budget at £102.9m for 2011/2012.
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A Fair fee
I think £250 would be too much as it could put off clients from complaining about the little things. I am sure that with a little research fair and sensible figures could be found which work from a psycological pijt of view. If there was a minimum fee of even £40 for complaints with redress maximums of say £1000 and then £250 for complaints aimed at higher redress whilst reducing the existing fee to advisers plus only charging on LOSS to a level where the FOS would get the same money. Consumers would then have to decide whether they really felt justified in pursuing a complaint after it had been REJECTED by the firm and would value the £40 or £250 they paid. It would also be good if the scheme was chanegd to TRUE mediation to try and keep both parties happy and only then followed by an adjudication system as a last resort and with some kind of right to resort to law, but at greater cost if the accussed really feels they are right and are willing to pay to defend their rights in court. That cost could be right to court and win and stay authorised or right to court and loose and deauthorise as if you are so sure you are right you should be allowed to make that decision.
Posted by: Phil Castle
Case fees
There should be a full,investigation into the FOS workings. I think that a lot of fraud would be uncovered as the FOS don't recognise it, never deem a case frivolous or vexatious. It's just anotehr ambulance chasing scam created by New Labour to create non jobs.
Posted by: Incompetent Regulators Awards Team
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Complaint Fees
Clients should be charged a fee for lodging a complaint. This can be refunded in the event of their case upheld. The fees should be at least £250 or maybe £500 just like firms have to pay. We'll see if the FOS is still around in t's current guise, e.g. consuemr champion and not independent which they should be!
Posted by: Incompetent Regulators Awards Team