Brokers are set to lobby the government hard over the "unfair" and potentially "crippling" proposals in the Treasury's recent consultation on the transition of product complaints.
The consultation paper, Mortgages and general insurance regulation: transitioning complaints, seeks views on whether the Financial Ombudsman Service (FOS) should be given automatic powers to deal with complaints made after FSA regulation starts in January 2005 about products bought from GISC members before that date.
Biba regulatory working party chairman Chris Arter said that the proposal was "potentially crippling" for brokers, with the possibility of brokers becoming mired in expensive complaints.
"There is a £600 fee for each case that is referred to the FOS. The public could make a meal of it if they wanted to.
"The Ombudsman has said that it would look at a range of options to alleviate the costs. It does accept that claims against brokers will, in the majority of cases, involve the insurer, but it is not saying what it will do. It is an unknown quantity for brokers. We shall be lobbying hard," said Arter.
There is also concern that brokers will be unfairly prejudiced if the FOS exercises retrospective jurisdiction.
The Broker Network managing director Grant Ellis said that brokers would be judged against standards that they were not prepared for at the time that they sold the products.
"At the time they sold the products they would not be keeping records to the standard required by the FOS. This happened in the IFA market. It would be a farcical situation and is unfair. We must avoid it happening and I will be lobbying very hard. The FOS should only have jurisdiction over products sold after the 14 January 2005."
The deadline for responses to the consultation paper is 21 November 2003.