News analysis: FOS complaint billing system ‘is unfair’


A broker said Mortgage strategy that the Financial Ombudsman Service (FOS) intends to charge him twice £750 for investigating complaints that were not upheld.

Brian Rix of Rix Financial Services says these are the first complaints he has received in 30 years. The first concerns an interest-only mortgage sold 13 years ago. The second concerns a boyfriend’s objection that Rix had informed the couple’s girlfriend of the amount outstanding on their mortgage, at her request.

“I didn’t give any advice or organize anything. I just provided accurate and truthful numbers to a client. The male customer filed a complaint with Sesame because he had been caught off guard and had therefore ‘been financially disadvantaged,’” Rix explains.

The FOS consultation offers those who have a keen interest in our work, and those who pay it directly, the opportunity to give their opinion

The first case was forwarded to the broker’s network, Sesame, and rejected. Both cases were then brought to the FOS – the first by a firm called Quanta Law and the second by the plaintiff himself – and dismissed again, with the first case being considered again after an appeal.

Like many networks, Sesame is entitled to three “free” complaints per year, which are shared by its entire pool of over 700 brokers. Once the network exceeds its free claims allowance, the cost of opening the case is directly passed on to the broker.

Rix says: “I think it is unfair to charge an adviser £750 for a complaint that is not upheld.

“Frivvolous, baseless and stale cases…should be excluded from this penalty as no investigation is required.”

If claims companies were to bear some of the costs when claims were unconfirmed, this would perhaps put an end to the “see what sticks” tactic.

The situation was not ignored by Sesame. COO Richard Howells said the network sympathizes with brokers “forced to pay for FOS to investigate complaints when they have done nothing wrong”.

He adds: “FOS has a vital role to play in our industry – and we certainly wouldn’t want to put barriers in the way of customers who have legitimate complaints – but the current system seems unfair to good, hard-working advisers. and we feel something needs to be done about it.

Howells argues that while it is ‘absolutely fair’ for an adviser to pay the £750 investigation fee if a complaint is upheld against them, ‘it is not fair for advisers to foot the bill for each case , even though they have done nothing wrong, and the complaint is dismissed”.

I think more can be done to weed out and dismiss frivolous complaints earlier in the process – perhaps by introducing a “triage stage”

He continues: “While we believe ‘polluter pays’ continues to be the right approach to funding FOS, we believe there is a way forward that is both fair and proportionate for councilors while at the same time respecting the customer’s right to complain.

“Most of the time these cases come from claims handling companies, pushing speculative complaints that have little chance of success. Regulating claims management companies has helped, but if they had to bear some of the cost when complaints were unconfirmed, it might put an end to the “see what sticks” tactic.

The Association of Mortgage Intermediaries (Ami) also took an interest in the situation.

The current system seems unfair to good, hard-working advisors, and we think something needs to be done about it.

Managing Director Robert Sinclair says that while Ami recognizes the importance of FOS, “it is important that funding for the service – paid for by paying companies – is based on a ‘polluter pays’ model, these companies using the service heavily and seeing upheld complaints contribute more.We don’t believe the current funding model achieves this goal.

Sinclair adds, “Too often good companies end up defending their reputation in cases that have very little chance of success.

“Ami has the opportunity to share his views on FOS’s future funding model at a consultation scheduled for June, and has already had early engagement with FOS to share our thoughts on potential solutions. He will be essential to ensure that claims companies only deal with plausible issues.”

A spokesperson for the FOS replied: “When the FOS was created, Parliament decided that access to a free and independent dispute resolution service was essential for public confidence in financial services.

Too often, good companies end up defending their reputation on cases that have very little chance of succeeding.

“Companies, not their customers, should bear the costs of resolving complaints.

“All financial firms covered by our service and regulated by the FCA pay an annual fee to contribute to our costs.

“Each year, we publicly consult our draft plans and budgets for the coming year.

“Consultation offers those who have a keen interest in our work, and those who pay it directly, the opportunity to provide feedback on how we deliver and fund our service.

“It’s part of our broader engagement with our stakeholders around our plans and priorities.”

Businesses, not their customers, should bear the costs of resolving complaints

Meanwhile, a spokesperson for Quanta Law said: “Complaints we represent about mis-sold mortgages are made on behalf of financially vulnerable consumers who have been advised to take out unsuitable mortgages.

“Quanta Law is a law firm, not a claims management company. Before presenting a complaint to a mortgage broker, we carry out a thorough investigation, including analysis of alternative mortgage products that were available at the time of advice.

“We are also taking a witness statement from the complainant to verify his recollection of the advice provided. For context, approximately 98% of the inquiries we receive from consumers do not pass our assessments and result in no complaints.

“The Ombudsman dismissed the complaints on the basis of the limitation and especially not on the merits of the complaint itself. The decision on the limitation is inconsistent with other decisions of the Ombudsman and we are now preparing to file a complaint. legal action in this regard.

Frivolous, baseless and stale cases…should be excluded from this sanction as no investigation is required

“Quanta Law prides itself on being a beacon of hope for mis-sold consumers and we are happy to have brought justice to countless victims. [of] financial fraud.

Although the FOS has yet to charge Rix, it concludes: “I think more can be done to weed out and dismiss frivolous complaints earlier in the process – perhaps by introducing a ‘screening stage’ – so that advisors do not have to incur a £750 fee in each case.”

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