The Financial Ombudsman Service is consulting on cutting fees for firms that settle cases early, or where complaints against them are not upheld.  

The under-pressure body, which handles complaints between consumers and firms, says the thrust of its proposals “aims to better reflect the effort and the cost we incur investigating cases and could support the early resolution of complaints”. 

It will ask firms whether case fees should be “differentiated based on the stage at which a case is resolved.  

“Complaints that are closed later in the process require more work and therefore cost more than those which are resolved earlier.” 

The body adds that it has also received calls from firms for “a stronger ‘polluter pays’ model where those firms found to have done something wrong contribute more towards our costs.  

“This option would see firms pay less if we feel they have already resolved the dispute fairly themselves.” 

Currently, firms pay a levy to the service, as well as a fixed fee of £650 for every case the body investigates against a business, regardless of the stage at which the dispute is resolved.  

Since April, complaints submitted by claims management companies and not upheld,  see fees reduced to £475. Most of the companies receive three free cases a year. 

The agency will also seek views on a change to its free case allowance.  

It says: “The introduction of charging for professional representatives now means the value of free cases can differ.  

“Changing the free case allowance to a monetary value would allow all respondent businesses and professional representatives to save the same amount of money.” 

The body also plans a move to collecting fees from firms “quarterly and in advance”. 

It adds: “This would be based on a forecast of case volumes, with a mid-year check and end-of-year adjustment for accuracy.  

“This would give the service the funds required to work cases while also ensuring business and representatives have a more predictable cash flow through the year.” 

Financial Ombudsman Service interim chief executive Jenny Simmonds adds: “These proposals are seeking to modernise our charges for businesses, creating a fairer funding model that is fit for the future, and which better reflects our work, while ensuring our service remains free to consumers who bring their cases directly to us.”      

The service will close its consultation on 8 October. 

Last week, the body said the number of complaints it dealt with fell to its lowest level in over a year, according to its latest quarterly data.     

It handled 68,000 complaints in the first three months of this financial year, compared to 74,600 new cases in the same period a year ago, an 8.8% fall. It adds that 31% consumer complaints were upheld across all products.   

Last month, Liam Coleman was appointed interim chair of the Financial Ombudsman Service, which is undergoing widespread changes to scale back its powers and speed up its claims procedures.