Financial Ombudsman Service to start charging professional representatives to refer cases

• Professional representatives were behind around 47% of the cases sent to us between April and December 2024.
• We will charge professional representatives £250 to refer a case to our service from April. Professional representatives will receive £175 back if the case outcome is in favour of the consumer.
• It will remain free for consumers to refer a complaint themselves, and for charities, families and friends who may be helping them.

Professional representatives will be able to bring ten cases to the service for free each financial year. After that, every subsequent case they refer will be chargeable. They will receive £175 back in credit if the complaint is found in favour of the consumer they represent, reducing the charge they pay to £75.

We are and will remain free to all those who bring their cases directly, as well as to families and friends, charities, and voluntary organisations who may be helping them.

A large proportion of complaints referred to us in recent years have been driven by professional representatives who either charge consumers or take a percentage of any redress awarded. Currently financial service firms pay a £650 case fee for complaints against them that we investigate, while professional representatives do not pay a case fee.

Under the new rules, if a complaint referred by a professional representative is not upheld or is withdrawn, the financial business against whom the complaint was made will pay a reduced case fee of £475, instead of £650.

The move aims to make the funding arrangements for us fairer and to encourage professional representatives to submit better-evidenced complaints, considering their merits more diligently before referring them.

James Dipple-Johnstone, Interim Chief Ombudsman at the Financial Ombudsman Service, said:

We've seen more cases brought by professional representatives, but fewer of these cases leading to a better outcome for their clients. Currently there is little commercial incentive for representatives to ensure the complaints they bring are well-founded or have merit. As a not-for-profit service, we expend our finite resources handling thousands of withdrawn or abandoned cases, which can lead to longer wait times for other customers.

The charges we are introducing from April will bring better balance to our fee model, helping us to resolve disputes quickly and ensuring a wider contribution towards our running costs.”

Between April and December 2024, around 47% of complaints submitted to us were from professional representatives. The professional status of these firms should mean that these complaints have a considerably higher success rate, compared to consumers who use the service without professional representation. However, only 26% of cases brought by professional representatives were found in favour of the consumer, compared to 38% of those brought directly by consumers for free.

James Dipple-Johnstone added:

Professional representatives can play an important role in resolving financial disputes by providing high-quality, good value services to those people who make an informed choice to employ them.

But it is important for consumers to know that it is and will remain free for them to bring a complaint directly to our easy-to-use service, and those who do so can keep all of any reward we make.”

The fee is part of a wider range of measures being brought in to encourage firms to submit well-evidenced complaints. The introduction last year of an enhanced digital service means professional representatives must now provide relevant evidence at the earliest stage – speeding up processes and enabling us to dismiss inappropriate complaints.

The Baroness Manzoor CBE, Chairman of the Financial Ombudsman Service, said:

I believe this marks an important and significant milestone in the financial services landscape, enabling us to continue our vital work in resolving disputes for both complainants and firms quickly and with minimum formality.

We will continue working closely with all stakeholders to ensure a smooth transition and to support CMCs and other professional representatives throughout this process.”

Together with the Financial Conduct Authority (FCA), we recently ran a joint Call for Input looking at how to modernise the redress framework to ensure it is fit for the future. Sudden and significant increases in complaints – including those driven by professional representatives – can cause firms to struggle to effectively respond, delaying any customer redress that may be due.

Full details of the new charging regime are outlined in a policy statement (PDF 1MB) published today. The proposal to charge a fee to professional representatives who refer cases to us has been subject to two consultations and the organisation published a summary of the feedback (PDF 229KB) it had received in November last year.

In January, the FCA published a letter which outlined its strategy for supervising Claims Management Companies (CMCs). It said that it would undertake work to consider whether CMCs are investigating the merits of potential claims before referring a complaint, and that it would look at CMCs submitting high volumes of complaints to us but achieving low uphold rates.

Notes to editors

Professional representatives brought around 103,000 of the 220,000 complaints we received between April and December 2024.

‘Found in favour of the consumer’ or ‘upheld’ means that the case was closed as a change in outcome in favour of the complainant.

Respondent firms under our group charging arrangement operate on an agreed case fee basis which slightly differs from a strict £650 case fee chargeable per complaint.

See the policy statement (PDF 1MB) for further detail.