FOS confirms decision to introduce CMC fees

The FOS has published a letter, dated 8 October 2024, from its Chair, Baroness Manzoor CBE, to FCA Chair, Ashley Alder, confirm its board’s decision to introduce a fee for certain claims management companies (CMCs) bringing cases before it.

The decision was made following a consultation which closed in July – the letter sets out feedback the FOS received from stakeholders and its proposed next steps.

Key points from the consultation feedback were:

• majority support for proposals to introduce a charge to make the FOS’s fee arrangement fairer by sharing costs across respondent firms and CMCs;
• disagreement on the level of fee to be charged – unsurprisingly, respondent firms prefer the full £650 case fee to be charged, whereas CMCs would prefer a very low charge, or none at all;
• broad support for the FOS to retain a residual fee for every complaint in scope, payable by CMCs;
• agreement with the proposed charging mechanism, whereby if the FOS does not determine in favour of the claimant, the current £650 case fee should be offset so the FOS does not have a vested financial interest based on the outcome;
• a lack of compelling evidence and data submitted of potential adverse impact in relation to vulnerable consumers;
• that the FOS should ensure that there is no disincentive to bringing cases directly to it;
• there remains a desire for the FOS to do more to raise awareness of its free service and the role it plays; and
• CMCs asked for sufficient time to prepare for the financial implications of changes.

Subject to the outcome of any Parliamentary consideration, and the FCA’s own deliberation, the FOS proposes to advance the option to implement a fee of £250 per case, reducing to £75 where the case is determined in favour of the complainant represented by the CMC.

It also plans to:

• Avoid vested financial interest in the outcome of individual complaints by reducing the fee payable by the respondent by £175 where the complaint is not successfully upheld – the FOS would retain £75 in every case regardless of outcome, which broadly equates to the cost of setting the case up; and
• Increase the free case limit from 3 to 10 per financial year for each CMC, meaning that over 80% of CMCs that currently refer cases will not be in scope for the fee, and only the bigger firms will be affected.