Wednesday, 05 March 2014 16:41

APFA responds to FOS budget consultation

The Association of Professional Financial Advisers (APFA) has responded to the Financial Ombudsman Service's (FOS) plan and budget for 2014/15. While APFA welcomes FOS' decision to keep its levy, standard case fee and the number of free cases at the same levels as last year, it has called on the Ombudsman to require all claims management companies (CMCs) submitting claims to pay a fee.

Chris Hannant, Director General at APFA, said:
"We want FOS to change the rules so that all CMCs contribute a fair share to the provision of the service. We fully support the right of customers to make a complaint when they have suffered financial loss, and recognise that CMCs can provide a useful service.

"CMCs make substantial amounts of money from what should be a free service to consumers. Therefore, we think they should be obliged to make some contribution to the cost of that service, rather than it being borne in full by the financial services industry. Introducing a fee should also encourage a more careful validation process before claims are submitted, rather than the scattergun approach we're hearing about now.

"There is a precedent for this working elsewhere. Last year the Ministry of Justice introduced fees for certain employment tribunal cases - and part of the rationale was to transfer some of the cost burden from taxpayers to those using the system. Since then, the number of claims brought has fallen sharply.

"We want to see FOS take a similar approach to its fees. It will discourage frivolous and in some cases fraudulent claims, and ensure the cost burden is allocated appropriately."

Also this week, APFA has responded to budget consultations by the Money Advice Service (MAS) and the Financial Services Compensation Scheme (FSCS).

Chris Hannant added:
"We need to see these services represent better value for money. A common call running through all our budget responses is that we want FOS, MAS and FSCS - and the FCA for that matter - to commit to sharing more services. It seems a sensible step in order to reduce costs for advisers."

APFA's responses to the FOS, MAS and FSCS budget consultations can be found on the current issues page.

Business and Finance

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