Aifa calls for claims handlers to pay FOS levies

[Amethyst]

Aifa calls for claims handlers to pay FOS levies

• Story by: Gemma Westacott
• Magazine: FTAdviser
• Published Wednesday , May 27, 2009

The Association of Independent Financial Advisers (Aifa) has called for claims management companies to be forced to pay the Financial Ombudsman Services' (FOS') levies.

The call comes after data published today (27 May) by the FOS revealed that 26 per cent of all cases referred to the ombudsman related to claims management companies - up from 16 per cent the previous year.
Aifa claims that this clearly demonstrates how intermediaries are cross subsidising other financial institutions.
This is because IFAs contribute 5.6 per cent of the FOS general levy, but only account for 3 per cent of complaints.
The association also warned the FOS to be aware of the cost implications of its targets for 45 per cent of complaints to be dealt with within three months, up from 30 per cent currently.
Andrew Strange, policy director of Aifa, said: "Whilst timeliness is clearly important, the ombudsman must be sensitive to the cost implications on the financial services industry in their significant levels of recruitment and ambitious targets.
"As an independent and impartial adjudicator, all stakeholders must be considered."
Strange added: "The decrease in IFA complaints from 4 per cent to 3 per cent of FOS’s work load is testament to the strong, long-term relationships which IFAs have with their clients.
"As demonstrated in Aifa’s recent publication 'Restoring Trust in Financial Services', IFAs are the most trusted of financial services institutions.
"Those advisers that act as agents of a consumer will inevitably have stronger and better client relationships, based on shared values, predictably leading to fewer complaints."

[Amethyst]

Re: Aifa calls for claims handlers to pay FOS levies

This was something Lord Hunt recommended in his review

RPC says that one are where the Hunt Review does suggest reform is in the treatment of claims management companies.
Comments Jonathan Davies: "Although claims management companies are outside the scope of FOS there is the concern that consumers are using claims management companies, which charge a proportion of any compensation awarded, when they could be going directly to the FOS free of charge."
"The Review suggests that claims management companies could be required to pay the FOS levy but that would probably require new legislation. The idea that there should be a case fee for vexatious claims presented by claims management companies, but not for such claims presented by claimants in person or other advisers, is discriminatory and will require legislation or a change in the rules under the Compensation Act, which are outside the FOS and FSA's control."