Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
FOS has now published proposals for its future funding having considered stakeholders’ feedback and the principles FOS has established in its previous conversations.
It is proposing to rebalance the levy and case fee to aim for a 50:50 split, with a significantly greater proportion of their income from the FOS levy as opposed to case fees. This will mean that all firms will pay a larger levy, with the largest firms paying most, thus retaining the principle that businesses who generate the most demand for their service in terms of individual cases should contribute more towards FOS’s costs. FOS believes that reducing the reliance on income from case fees supports their management of complexity in the complaints as PPI subsides. It also feels that the change will protect FOS from the volatility of demand for their services.
There are no proposals to change the case fee level from the existing £550 per case, based on assumptions of complaint volumes. The proposal to leave the case fee unchanged seems sensible but perhaps FOS should reconsider an increased fee for higher users and also the possibility of a ‘quality measure’ that would deliver different pricing bands. A core band of £550 per case if the overturn rate in the previous year was between say 30% and 50%. Those with overturn rates higher should pay 50% more, those with an overturn rate less than 30% pay 50% less
It is proposing to reduce the level of ‘free’ cases from 25 to 10 per firm. FOS states that most of the smallest firms have never reached the 25 threshold, are unlikely to have more than 10 and many have none. Mortgage firms might be concerned that it would be inappropriate to change the ‘free’ case levels for firms at a time when they are experiencing significant interest in historic mortgage sales from numerous CMCs. It also means that those who have more than 10 cases will see their costs rise substantially. The plans need deeper financial modelling.