The Financial Ombudsman Service has begun a consultation on whether to change its case fees, with businesses paying less for complaints resolved at an earlier stage.

Previous consultation feedback had called for the Ombudsman to differentiate its case fees for different types of business.

It said today’s proposals aimed to better reflect the cost and effort the Ombudsman incurs investigating cases.

Currently firms pay a fixed fee of £650 for every case against them the service investigates, regardless of the stage at which the dispute is resolved.

If the complaint is submitted by a professional representative and not upheld by the Ombudsman, this fee is reduced to £475.

The Ombudsman is seeking views on the proposal that businesses’ case fees are differentiated based on the stage at which the case is resolved. This may mean lower fees for cases resolved earlier in the complaints process.

It is also seeking views on whether case fees should be differentiated based on the complaint outcome. Previous feedback from stakeholders has called for a stronger “polluter pays” model where those firms found to have done something wrong contribute more towards the service’s costs. This option would see firms pay less if the Ombudsman feels they have already resolved the dispute fairly themselves.

Jenny Simmonds, interim chief executive at the Financial Ombudsman Service, said: “We are undertaking an ambitious transformation programme to reform our service and make it work for today’s economy.

“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 FOS is also seeking views on changing the free case allowance to a monetary value rather than a number of cases. Currently most firms receive three free cases a year.

In 2024/25, seven in ten businesses whose customers referred complaints to the Ombudsman did not pay any case fees.

Also included in the proposals is a move to change the Ombudsman’s payment mechanism to charge the majority of businesses and professional representatives quarterly and in advance. This would be based on a forecast of case volumes, with a mid-year check and end of year adjustment for accuracy.

The FOS claims this would give the service the funds required to work cases while also ensuring businesses and representatives have a more predictable cashflow through the year.

The consultation closes on 8 October.