FOS has published its responses to its Consultations charging Claims Management Companies (CMCs) and other Professional Representatives (PRs), and has written to the FCA with the outcome accordingly. FOS published its second consultation paper in May 2024 on these proposals for CMCs and other PRs. This followed its initial consultation that formed part of its 2024/25 Strategic Plans and Budget Consultation Paper, which was published in December 2023. The consultation was open for six weeks between 23rd May 2024 and 4th July 2024, generating 137 responses.
An original proposed implementation date, for charging arrangement to cases referred to FOS from 1st October 2024, was delayed as a result of the dissolution of Parliament prior to the General Election.
The main decisions in the Consultation response are:
- Subject to the relevant approval by the FCA, FOS will proceed with the £250 fee level as proposed in the Consultation, but introducing the proposed ‘contingent’ fee framework dependent on the outcome of the complaint (the £250 fee is reduced to £75 if the case outcome reached is in favour of the complainant).
- FOS will publish a relevant Policy Statement once it receives the relevant approval by the FCA, will communicate a date from which it proposes to begin charging CMCs and other PRs (subject to the relevant prerequisites being met, Parliamentary approval of a Statutory Instrument, and the timing of the consent procedure to be carried out by the FCA).
In the letter to the FCA, the Chair of FOS (The Baroness Manzoor CBE) has set out that:
- There is majority support for the proposals to introduce a charge to make FOS’ fee arrangement fairer by sharing costs across respondent firms and CMCs, with a residual fee to be retained by FOS for every complaint in scope.
- FOS will implement a fee of £250 per case, reducing to £75 where the case is determined in favour of the complainant represented by the CMC.
- FOS will avoid vested financial interest in the outcome of any individual complaint by reducing the fee payable by the respondent firm by £175 to £75 where the complaint is not successfully upheld against them. FOS would retain £75 in every case regardless of outcome as this broadly equates to the cost of setting the case up on our systems.
- FOS will increase the free case limit from three to ten per financial year for each CMC, so they could test cases raising new issues and learn from them; with a view to this informing their own due diligence for subsequent cases of that type which they may wish to bring. This will mean that over 80% of the CMCs that currently refer cases to FOS will not be in scope for a fee, so only the bigger firms will be affected.
- FOS will implement the arrangements as soon as possible, subject to Parliamentary and FCA stages, which is now likely to be early 2025 to give sufficient time to prepare for the required changes.