PIMFA urges higher FOS case fees for CMCs

Wealth management trade body PIMFA has urged the Financial Ombudsman Service to push up proposed cases fees for CMCs to better share the burden of costs between between claimants and firms hit by a complaint. PIMFA wants the FOS to “level the playing field” between Claims Management Companies (CMCs) and financial services providers. Many CMCs are believed to have pursued claims over SIPPs and pension transfers in recent years. In its response to the FOS Consultation ‘Charging Claims Management Companies and other Professional Representatives’, the body says that while a move to levy a fee to CMCs is welcome, it will not achieve the policy objectives set out by the government when this power was given to the FOS. PIMFA says that a fee of £250 for CMCs and professional representatives will not act as a disincentive to bring forward ‘targeted block cases’ against firms that have little chance of success. PIMFA has urged the FOS to review its approach and seek to levy a higher charge to share the cost burden better between firms and CMCs. The proposed case fee of £900 outlined in the FOS consultation proposals (£250 case fee for the CMC and £650 for the respondent firm), could instead by split 50-50 split between both parties, PIMFA says. This would result in respondent firms being required to pay £450 - rather than £250 - as would CMCs and professional representatives. The change would mean CMCs paying more per case and this would be “more equitable” says PIMFA and recognise the “limited role” CMCS play in advancing cases on behalf of consumers. The trade body says it is not convinced that raising case fees for CMCs would result in consumer detriment, given that there is little evidence that the use of a CMC results in a "demonstrably better" outcome for consumers. PIMFA has also urged the Solicitors Regulation Authority (SRA) to accelerate its plans to adopt a regulatory framework for CMCs which mirrors the FCA. Simon Harrington, head of public affairs at PIMFA, said: “We would never advocate for the FOS to be anything other than free of use for consumers. It plays a valuable part in the financial services ecosystem, and we will always defend the right of consumers to access it.” “In accepting the principle that the FOS is and should always remain free to access for consumers, we find ourselves questioning why it is that CMCs should be able to insert themselves into a process for their economic benefit where there is little evidence to suggest that their presence is in any way contributory towards consumers receiving a good outcome.” “Whilst we are pleased to see that the FOS has accepted the principle that CMCs and professional representatives should be required to contribute towards case fees which they bring forward, we strongly believe that the FOS should review its proposals in order to set out a more equitable settlement between CMCs and respondent firms.”

PIMFA urges higher FOS case fees for CMCs

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