The FOS is consulting on its Plan and Budget for the 2020/21 financial year. The headline proposal is to change the funding model. Instead of the existing 50/50 balance between case fees and the general levy on authorised firms, the proposal is for 60% of the Ombudsman’s costs to be met from case fees and 40% from the levy.
To bring about this change, FOS intends to increase the case fee to £650 and to reduce the number of free cases per firm to 10. This means that a firm’s 11th and subsequent FOS case in each financial year will trigger the payment of the case fee. However, FOS says that 80% of firms will still pay no case fees. The increased case fee will apply to all cases closed after 1 April 2020, regardless of when the case was first referred to FOS, however the Service emphasises that the case fee has been fixed at £550 for the last seven years.
In the medium term, FOS wants case fees to make up 85% of its total funding.
FOS expects that it will receive 245,000 new complaints between April 1 2020 and March 31 2021, and anticipates reducing its backlog by resolving 290,000 cases during the same period. When the 2019/20 financial year ends in March, FOS believes it will have received 315,000 complaints, so it expects total complaints to reduce by 22% in the next financial year.
Payment protection insurance (PPI) is still a significant part of the FOS workload – although new PPI complaints can no longer be submitted to providers, consumers still have six months from the date of the firm’s final response to refer the case to FOS. Some of the biggest banks have suggested it may be summer 2020 before all of its PPI complainants have received their final response. The Service expects to reduce its backlog in this area by closing 125,000 PPI complaints while receiving 100,000 new cases. FOS predicts it will receive 150,000 complaints about this product in the current financial year.
FOS expects consumer credit complaints in 2020/21 to be 15% lower than in the current financial year. The forecast number of complaints for 2019/20 is 114,900 and next year’s prediction is for 97,800 new cases.
Complaints about insurance other than PPI are expected to fall by 4% to 33,400 and investment and pension complaints are anticipated to fall by 7% to 12,500.
FOS expects to receive 130,000 complaints about claims management companies during the next financial year, which is the same as its latest estimate for the current financial year that ends on March 31 2020. FOS has launched a new Claims Management Ombudsman brand, with its own website.
Authorised firms and other interested parties are welcome to respond to any of the areas of the Plan and Budget document. The deadline for responses is January 31 2020.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article