Financial Ombudsman Service's (FOS) consultation on Charging Claims Management Companies and other professional representatives - Which? response

Summary:

• We welcome initiatives to ensure that the Financial Ombudsman Service (FOS) is not overburdened and that the quality of complaints it receives from professional organisations are of a good standard. However, we feel that the proposals in this consultation are aimed at addressing poor behaviour from some organisations that should be addressed by better regulatory supervision in the first instance.
• While we sympathise with the FOS in that it appears to be facing a considerable volume of complaints with little chance of success and a number of poorly presented cases, we do not believe the FOS has presented enough evidence to show that introducing a fee payable by professional consumer representatives will address the concerns it has identified. Claims Management Companies (CMCs) and professional representatives are an important route to justice for many consumers and we are concerned that the FOS has not appropriately analysed the impact the introduction of these fees will have on consumers seeking redress through CMCs. 
• Under Financial Conduct Authority (FCA) regulation, cases referred to the FOS by CMCs and other professional representatives should be of good quality and appropriately evidenced. It is clear from the consultation document that this is not always the case. In the first instance, the FCA and the relevant legal regulator(s) must be more robust in their supervision of CMCs and take the necessary enforcement action when existing regulatory requirements are not met. Regulatory intervention in this way deals with the cause at its root, prior to reaching the FOS and adding to its costs.
• At some point in the future following regulatory intervention, it may be right for FOS to introduce case fees. Before proceeding with such plans, the FOS first needs to better understand who is using CMCs and other professional representatives, as well as why they are choosing to do so.
• The definitions used in the consultation and proposed amendments to the handbook are ambiguous and may apply to organisations that the FOS is not intending this to cover. Certain consumer bodies may be caught within the definition, including Which?.