In a submission to FOS’s Fee Review Consultation Paper, the FSC acknowledged that FOS fees consist of three components – the membership levy, the user charge and dispute resolution schemes (EDRs) – but pointed out the proposed maximum membership levy is the equivalent to 227 per cent of the current maximum rate.
“While acknowledging that this base fee may or may not be the significant proportion of FOS fees borne by a member (which will depend on the extent of variable FOS fees incurred by the FOS member), it certainly is a very large increase,” said the submission.
For FSC members, which are typically conglomerate groups, the increase is particularly significant when applied to each licensee/FOS member across the organisation, according to the submission.
“For this reason, we consider that FOS ought to consider a maximum (and capped) group aggregate membership levy where a FOS member is part of a related corporate group consisting of other FOS members,” the FSC said.
“FOS may wish to explore or benchmark whether there are similar fee (capped) regimes in other EDR schemes in respect of members of the same corporate group.”
The ombudsman may determine that the maximum aggregate membership levy payable across related FOS members within a corporate group cannot exceed, for example, $100,000, the submission said.
“That would mean that corporate groups with more than four FOS members would not pay more than $100,000 in aggregate for the (base) membership levy.
“Clearly FOS already recoups variable costs by the user pays fees it charges in addition to the (base) membership levy,” the submission said.
If a FOS member has no or negligible cases registered against it, the increase in the FOS membership levy will represent “a significant increase in that FOS member’s total FOS fees”, the FSC said.
