The Financial Ombudsman Service said that it has seen an increase in complaints driven by professional representatives who either charge consumers or take a percentage of any redress awarded
The Financial Ombudsman Service (FOS) is set to impose a £250 fee on claims management companies for each case referred to its service from April 1, 2025.
The FOS declared that there’s typically “little commercial incentive” for such firms, acting as middlemen, to ensure the complaints they submit are properly founded or have any real substance. Introducing the charge aims to create more equitable funding arrangements and push professional representatives to bring forward better-substantiated grievances.
In figures released, from April to December 2024, nearly half of the complaints—47%—to the Financial Ombudsman Service came from professional representatives, yet only 26% of these professionally represented cases went in favour of the client, versus a 38% success rate for cases lodged by consumers independently and at no cost.
The FOS, serving as the arbiter for unresolved disputes between individuals and their financial institutions, will continue to offer its services free of cost to individuals handling their own representations, inclusive of assistance they might receive from family, friends, charities, or non-profit bodies. Nonetheless, professional agents will be entitled to submit up to ten complaints per fiscal year free of charge, according to the FOS.
Subsequent submissions will invoke the new fee, with an incentive rebate of £175 awarded for each case won on behalf of the consumer, ultimately lowering the representative’s outlay to £75. .
A substantial number of complaints handled by the FOS in recent years have been driven by claims management companies that charge consumers or take a cut of any compensation awarded. Currently, financial firms pay a £650 case fee for complaints investigated by the FOS, while claims management companies do not pay a fee.
Under new rules, if a complaint referred by a claims management company is not upheld or is withdrawn, the financial firm will pay a reduced case fee of £475 instead of £650. James Dipple-Johnstone, interim chief ombudsman at the FOS, said: “We’ve seen more cases brought by professional representatives, but fewer of these cases leading to a better outcome for their clients.
“Currently there is little commercial incentive for representatives to ensure the complaints they bring are well-founded or have merit. As a not-for-profit service, we expend our finite resources handling thousands of withdrawn or abandoned cases, which can lead to longer wait times for other customers.
“The charges we are introducing from April will bring better balance to our fee model, helping us to resolve disputes quickly and ensuring a wider contribution towards our running costs.
“Professional representatives can play an important role in resolving financial disputes by providing high-quality, good-value services to those people who make an informed choice to employ them.
“But it is important for consumers to know that it is and will remain free for them to bring a complaint directly.”
The idea of charging a fee to professional representatives has been up for debate before.
Rocio Concha, director of policy and advocacy at consumer watchdog Which? “The support of professional firms can be valuable for consumers’ escalating complaints, particularly for complex issues, but is by no means essential, to have a claim upheld by the ombudsman.
“If you do decide to use a professional firm, make sure they are authorised by the Financial Conduct Authority (FCA) or a legal regulator by searching the relevant register.”
