UK Financial Ombudsman Service funding model proposals

The UK Financial Ombudsman Service (FOS) has published a consultation on further changes to its case fee structure. In April, the FOS implemented changes to its charging structure, which included charges for professional representatives bringing cases. The proposed additional changes in this consultation are stated to respond to regular feedback from stakeholders that further differentiation is required to support the 'polluter pays' model and to better reflect the work the FOS carries out on individual cases. The consultation sets out two methods for differentiation:

• By stage: using the current casework process by way of example, which the FOS considers could easily be adapted to new processes, such as a registration stage being implemented; and/or
• By outcome: for non-represented cases, whether a complaint is upheld or not.

The consultation also proposes ways to simplify and modernise the billing processes and technology. One suggestion is to move to quarterly billing in advance for 95% of firms and professional representatives that use the service. Another suggestion is to move from free cases to a monetary allowance, to ensure that the free case allowance has the same value to each respondent business and professional representative. Feedback is requested by 8 October and will be considered alongside feedback from the joint FCA-Financial Ombudsman Service consultation and HMT consultation on modernising the financial redress system.

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