ACSO has submitted a response to the Financial Ombudsman Service (FOS) consultation paper on the 2024/25 Plans and Budget. The paper included a call for evidence on the principle of whether to introduce fee to be paid by consumers when using professional support in submitting complaints about financial services companies.
A further consultation on the exact details would follow if the principle is agreed, but we believe the current proposed cost of £50-£650 is unfair and will lead to fewer legitimate complaints being made. It also seems egregious that the new charge is being proposed at the same time as a £100 per complaint reduction in fees payable by financial organisations.
The proposals amount to a stealth tax on consumers, with the fees almost certainly being passed onto consumers. The purported aim of reducing unmeritorious claims is one ACSO supports but not through these means.
With the support of Bott and Co, ACSO submitted evidence that 81 per cent of lenders fail to disclose the commission model used in respect of car finance, complaints about which are on the rise. This type of poor lender behaviour seems likely to increase if consumers struggle to find appropriate professional support if they don’t feel confident making their own complaint.
The proposal could also disproportionately affect vulnerable consumers as well as decreasing the market choice for all consumers as representatives are priced out of the market. It may have, from the FOS perspective, a welcome impact on complaints volumes and therefore help improve average time to resolution, but only for perverse reasons and as a result of consumer detriment.
The proposals could be perceived as a reallocation of income sources rather than as a necessary step to discourage weak or vexatious complaints, going against FOS’s consumer duty.
The consultation can be found here, ACSO looks forward to the FOS response.