The Financial Ombudsman Service (FOS) will introduce a £250 charge for claims management companies to refer a case to its service from April 1 2025.
It said there is currently “little commercial incentive” for firms acting as middlemen to ensure the complaints they bring are well founded or have merit.
The FOS said the move aims to make funding arrangements fairer and encourage professional representatives to submit better-evidenced complaints.
Between April and December 2024, around 47% of complaints submitted to the Financial Ombudsman Service were from professional representatives – but only 26% of cases brought by professional representatives were found in favour of the consumer, compared with 38% of those brought directly by consumers for free.
The FOS, which resolves complaints when people cannot come to an agreement with their financial firm, will remain free to those who bring their cases directly, as well as to families and friends, charities, and voluntary organisations who may be helping them.
We’ve seen more cases brought by professional representatives, but fewer of these cases leading to a better outcome for their clients
James Dipple-Johnstone, FOS
Professional representatives will be able to bring 10 cases to the service for free each financial year, the FOS said.
After that, each case they refer will be chargeable. They will receive £175 back in credit if the complaint is found in favour of the consumer they represent, reducing the charge they pay to £75.
A significant proportion of complaints referred to the dispute resolution service in recent years have been driven by professional representatives who either charge consumers or take a percentage of any redress awarded, according to the FOS.
Currently, financial service firms pay a £650 case fee for complaints against them that the FOS investigates, while professional representatives do not pay a case fee.
Under the new rules, if a complaint referred by a professional representative is not upheld or is withdrawn, the financial business against whom the complaint was made will pay a reduced case fee of £475, instead of the £650 charge.
James Dipple-Johnstone, interim chief ombudsman at the FOS, said: “We’ve seen more cases brought by professional representatives, but fewer of these cases leading to a better outcome for their clients.
“Currently there is little commercial incentive for representatives to ensure the complaints they bring are well-founded or have merit. As a not-for-profit service, we expend our finite resources handling thousands of withdrawn or abandoned cases, which can lead to longer wait times for other customers.
“The charges we are introducing from April will bring better balance to our fee model, helping us to resolve disputes quickly and ensuring a wider contribution towards our running costs.”
He added: “Professional representatives can play an important role in resolving financial disputes by providing high-quality, good-value services to those people who make an informed choice to employ them.
“But it is important for consumers to know that it is and will remain free for them to bring a complaint directly.”
The proposal to charge a fee to professional representatives has previously been consulted on.
