Given the Financial Ombudsman Service's (FOS) desire to see larger caseload contributors paying a greater share of the costs, do you think this heralds a focus on smaller companies well being from regulators?
We are a large sector by the number of firms, but we should not be seen as a soft touch where large costs can be spread.
The proposal for larger caseload contributors to pay a greater share does not arise from the emergence of a new altruistic streak from the regulators aimed at improving smaller companies' wellbeing, but is simply a fairer allocation of costs.
That said smaller companies may find their lives easier as a result, particularly as they will receive more free cases. Now let us see that fairness seep into the review of the Financial Services Compensation Scheme's funding.
Rachael Tyrrell, Gold IFA
With the challenges of the RDR, it is positive to see some relief for small firms. Under the FOS preliminary consultation paper, it proposed to increase the number of free cases from the current three to 25, effective from April 2013.
Of the 26,000 authorised firms, about 3% (or 743 firms) paid case fees in 2010-11 and of that 3%, almost two thirds had less than 25 cases.
So, the proposals should be beneficial to small firms in addressing the cost of dealing with a complaint as the FOS is seeking to recover their costs from where they fall, in particular from mass complaints and trends such as PPI.
Small firms are already contributing to FOS overheads through the levy, which is proposed to be retained unchanged. In addition, many are authorised representatives within a network, and may still not benefit from the increase of free cases.
As a result, it remains to be seen how networks deal with the allocating and sharing of the free cases. Of course, the cost of responding to a complaint is only one aspect of a small firm receiving a complaint.
Large firms have dedicated complaints handlers and the process is more impersonal and is system driven.
However, a complaint within a small firm is likely to come from a client the adviser knows well. On top of that, a small firm is also unlikely to experience a variety of complaints and be less experienced in this regard. Overall, the proposals must be viewed as advantageous to small firms.
Debbie Kleiner-Gaines, Best Health UK
Firstly, PMI still does not generate many complaints for the FOS and those occurring are more likely to be about the insurer.
For example, FOS has stated that more than three-quarters of the cases it receives relate to policy terms and conditions, including: exclusion of claims, because the insurer has deemed a condition to be "chronic"; benefits limits because, for example, the insured person was not treated at a designated hospital; or the application of exclusions for experimental or unproven treatment and the exclusion of cosmetic and other treatment.
It also noted that other significant areas of complaint include maladministration and non-disclosure by the policyholder. All these complaints are outside of the intermediary's control and all we can do is guide our clients in the event of a disagreement with their insurer.
I am confident that our guidance stops these sorts of complaints getting as far as the FOS. In fact, there is little information about PMI on the FOS website. It seems to be near the bottom of the list and so it should be.
Of course, as a small business owner, I do feel that the bigger businesses generating most complaints should take their fair share of the cost - that makes absolute sense. But I am also happy to pay my share in the unlikely event of a complaint ever getting to that stage.
To sum up, I don't necessarily feel this heralds a focus on small companies' wellbeing. It just so happens to benefit us.
