’This is no way to proceed,’ says executive director

Plans by the Financial Ombudsman Service (FOS) to issue a charge when consumers complain to the regulator about insurance through professional representatives have been slammed.

In its 2024/25 plans and budget consultation paper, published in December 2023, the FOS proposed to charge such firms anything from £50 to £650, dependent on the complaint.

However, the Association of Consumer Support Organisations (Acso) has called the move “unfair” and warned it could lead to fewer complaints being made.

Acso executive director Matthew Maxwell Scott explained this was because those firms will “almost certainly be having to pass on the cost increase to their customers”, which could make complaining “unaffordable”.

“We understand that FOS wants to reduce the number of unmeritorious claims, which we support, but this is no way to proceed,” he added.

“Unjustified complaints impact all consumers through increased costs of products and services, but the way many companies deal with complaints means it is more challenging than it should be for professional claimant representatives to filter them out.”

‘Important’ role

This came after figures from the FOS showed that 24,496 general insurance and pure protection complaints were made during H1 2023, up from 19,346 in H2 2022.

And its quarterly data, published in December 2023, showed that complaints about car and motorcycle insurance increased to a five-year high between July and September 2023.

The FOS said it was thinking about charging professional firms handling such cases as it acknowledged “the need to do more to raise awareness and accessibility of our service to help complainants come direct to us”.

However, Maxwell Scott said claims managers and other professional representatives “play an important part in ensuring complaints can be made and lessons can be learned”.

“We argue that the authorities should sponsor a system that makes it as easy as possible for consumers to seek redress when they have been mistreated,” he added.

“Our concern is that these proposed fees will be passed on to them, meaning many will not complain in the first place, even if they have a justifiable case.

“At a time when the cost of living crisis is still hitting people, another layer of cost seems regressive – charging fees is just another form of stealth tax on hard-pressed consumers.”