Financial Services and Markets Act 2000 (Ombudsman Scheme) (Fees) Regulations 2024

The Government have also noted concerns that firms experiencing this treatment may feel pressured into settling claims early by offering an amount below the £650 case fee in order to reduce the overall cost to the firm, even where they feel the claim is without merit.

To address these exploitative practices, this instrument will enable the FOS to charge a case fee to professional representatives for bringing complaints on behalf of claimants. This will provide a financial incentive for those professional representatives to consider carefully the merits of any cases they are bringing on behalf of complainants and to avoid flooding the Financial Ombudsman Service with templated complaints. Charities bringing complaints on behalf of consumers are not included in this instrument and therefore will not be charged by the FOS and, of course, the FOS will remain completely free for consumers to access directly.

As it is already for financial services firms subject to complaints, the Financial Ombudsman Service will be responsible for determining exactly who is charged and the level of any fees. The FOS has consulted on its proposed detailed approach to charging fees to professional representatives in anticipation of this instrument. This proposed a fee of £250 to professional representatives for each case they bring. When the FOS finds in favour of the claimant represented by the professional representative, it has proposed that the fee will be reduced to just £75. In this way, it has sought to disincentivise bad behaviour, while minimising the impact of the changes on professional representatives bringing cases with merit. If this SI is approved, the Financial Ombudsman Service will confirm its final plans, having considered the responses to its consultation.

The approach taken through this SI ensures that the FOS will remain cost-free to consumers while ensuring that the poor behaviour of some professional representatives does not undermine the ability of the FOS to deal with consumer complaints promptly. I hope noble Lords will join me in supporting these regulations, I commend them to the Committee, and I beg to move.

Finally, could my noble friend the Minister advise, or come back by way of writing, on whether the Government intend to ameliorate the situation? Sometimes, people like the services of professional agents, notwithstanding their level of financial security, and would appreciate that, and they do not think that it is fair that the cost that has been levied on the professional claims person should be passed on to them.

There is an important point here that needs to be firmly pointed out. We re-emphasise: all consumers can access the service free of charge and without the need for any professional representative support. Where consumers choose to use a professional representative, there are rules in place to limit the amounts that these firms can charge. The FCA, which regulates claims management companies and professional representatives, and the Solicitors Regulation Authority, which regulates legal professionals, already restrict the fees that a professional representative can charge to consumers through their fee cap rules. The FCA has agreed that any fee paid by professional representatives to the Financial Ombudsman Service will be included in this cap; this will prevent fees being passed on to consumers in cases where the representative is charging at the maximum level, which the FOS understands to be the case already for most professional representatives.

If there is a feeling that I need to follow up in writing, I will of course do so, but, with those closing comments, I hope that we can move forward.