Regulators promise financial complaints shake-up

The system for reviewing UK financial services complaints will be overhauled to prevent “mass redress events” with increasing numbers of complaints brought by professional representatives.
The plans, unveiled by the Financial Ombudsman Service (FOS) and Financial Conduct Authority (FCA) on Friday, came after Rachel Reeves called for the two regulators to improve how they handle such mass complaint events.
The two organisations outlined a number of potential changes to the redress system, including giving companies longer to respond to complaints and reducing the scope to appeal against decisions.
Inviting feedback from the industry, they said they would present proposals in the first half of next year.
The FOS said that it would start charging fees of £250 for every case brought by claims managers and other professional representatives after the first ten each year. That fee would be lowered to £75 if the claims were successful. Individual consumers would still have free access to the watchdog.
It noted that the rules which dictate how it handles complaints were last reviewed ten years ago and the landscape had changed “significantly”. Professional representatives have been bringing increasing numbers of cases to the FOS, it said, going on to charge a significant proportion of any redress that is awarded.
The two institutions have been in the spotlight over the handling of complaints related to the mis-selling of car finance, which has disrupted the supply of loans to car buyers. The significant number of complaints has threatened to overwhelm the FOS and forced the FCA to pause the complaints process.
Each year the FOS handles more than 200,000 cases brought by consumers whose complaints are rejected by financial services providers, although the regulator has seen a 50 per cent increase in consumer claims in the year to June.
James Dipple-Johnstone, deputy chief ombudsman at the FOS, said: “We have seen how large volumes of complaints in particular areas can impact the effectiveness of the system. By further strengthening our work with the FCA and industry, we can identify and address these issues more promptly to ensure better outcomes for all.”