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FOS rejects calls for claims company levies

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  • 07/08/2012
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FOS rejects calls for claims company levies
The Financial Ombudsman Service (FOS) has rejected calls from industry stakeholders for claims management companies (CMCs) to be charged FOS fees and levies.

The CMC industry has grown substantially in recent years as the payment protection insurance (PPI) insurance mis-selling scandal was brought to the public’s attention.

But advisers have accused some claims companies of targeting them unfairly.

In a feedback statement on its consultation on modernising case fee arrangements, the FOS said a “significant minority” of stakeholders were calling for fees and levies to be paid by CMCs.

However, although it said it could understand why this should be the case, it has rejected the proposals.

“We do not believe that such a requirement would address the underlying issues in the claims management sector – not least because the costs would ultimately be borne by consumers themselves,” it said.

“Rather, we believe that these issues would best be addressed by better regulation of the claims management sector – and by better prevention of ‘mass complaints’ at source.”

Advisers have previously criticised the Ministry of Justice for not doing enough to protect firms from invalid mis-selling cases levelled by claims management companies.

Elsewhere in the statement, the FOS said it would move ahead with its plans to overhaul its case fees process.

The changes will see small FOS users – those responsible for 25 or fewer claims per year – get 25 free cases a year from April 2013, up from the current three per year.

Meanwhile, the largest users – around ten groups which account for 70% of the service’s caseload – will move to a new group account arrangement, which would help to more accurately measure the cost to the Ombudsman.

The changes to small firms would result in just 1% of financial businesses paying any case fees.

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