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The UK financial ombudsman announced on Friday it would start charging claims management companies for bringing cases only a day after its chief executive quit unexpectedly, having clashed with its board over the plans.
The Financial Ombudsman Service, which resolves consumer complaints against the financial services sector, said that from April it would charge claims management companies £250 for every case they bring beyond the first 10 each year. This would fall to £75 if a claim is successful.
The change is designed to address concerns that “there is little commercial incentive for representatives to ensure the complaints they bring are well-founded or have merit”, the FOS said.
Only 26 per cent of cases brought by professional representatives succeeded, it said, compared with 38 per cent of those brought directly by consumers.
The change is likely to be welcomed in the City of London, where executives have complained about “ambulance chasing” claims managers pursuing spurious cases. Consumers will still be able to refer complaints directly to the ombudsman for free.
However, representatives of “no-win no-fee” legal groups have warned that the new charges may be “weaponised” by financial groups to deter consumers from bringing genuine cases to the ombudsman.
The FOS announcement came only hours after it said Abby Thomas had stepped down as its chief executive, without explaining why she was leaving.
One person familiar with the matter said the ombudsman’s board was frustrated at her initial reluctance to start charging claims management companies.
Thomas did not respond to a request for comment and the ombudsman declined to comment on whether there had been a boardroom rift over the introduction of fees.
