Proactive Investors - Britain’s financial regulator, the FCA, alongside the Ombudsman Service (FOS), has called for input on how to manage mass complaints and claims for mis-selling compensation more effectively in the future.
On Wednesday, the FCA warned that firms involved in the growing motor finance claims scandal would need additional time to prepare for an anticipated surge in claims. In response, the FCA and the Ombudsman Service have invited suggestions on improving the handling of potential future incidents.
City firms have cautioned that the scale of the motor finance issue could rival that of PPI, posing a significant threat to the sector in its current form.
The regulator is urging firms to flag potentially harmful situations with market-wide implications earlier and to address complaints more efficiently.
The FCA said: “In some cases, mass redress events have been precipitated by professional representatives, for example in high-cost credit, packaged bank accounts, and authorised push payment (APP) fraud.
"The greater the proportion of complainants represented by professional representatives, the lower the proportion of redress paid to consumers overall, with some professional representatives charging up to 30% of the redress award in fees.”
The FOS added that while individual cases are generally handled well, sudden surges of mass claims—particularly those submitted by professional representatives—can leave firms struggling to cope.
James Dipple-Johnstone, Deputy Chief Ombudsman at the FOS, stated: “We are committed to continuously improving our service and helping to create a redress framework fit for the future.”