Things may soon be very different indeed at the Financial Ombudsman Service (FOS) as the end of the payment protection insurance (PPI) saga draws closer. PPI has, in the words of some of their staff, ‘industralised’ the FOS in recent years, as the complaints adjudication body was at one time forced to deal with the 2,000 PPI complaints they were receiving every day. The deadline for making a PPI complaint is August 29, and after they receive their final response from the firm consumers will have six months to refer their complaints to the FOS.

Although complaints in areas such as consumer credit have risen sharply of late, the Service still expects that its workload will decrease significantly once the PPI saga has finished. In the financial years 2012/13 and 2013/14, the number of new cases referred to the FOS topped 500,000, and in the current financial year, 2019/20, more than 400,000 new cases are expected. The organisation expects that, by 2022/23, its annual caseload will be below 200,000.

The FOS has now launched a consultation on what the organisation might look like in the post-PPI world. One of its most radical proposals is to change the way the Service is funded.

At present, 85% of the FOS’s funding comes from case fees and 15% from the general levy on authorised firms; however, the new plan is to change this so that the Service is funded 50/50 by case fees and the levy.

Currently, firms have 25 ‘free’ cases per year, so they only pay the case fee on their 26th and subsequent cases in any financial year. This means that 90% of firms never pay any case fees. The FOS is proposing to reduce the number of free cases to 10 per year, but the consultation paper says that 82% of firms will still pay no case fees. The case fee has been frozen at £550 per complaint in recent years and the FOS says that this figure is unlikely to change much in the near future

The paper also comments that, as PPI complaint volumes reduce, the complexity of the cases it handles is increasing.

Chief ombudsman Caroline Wayman commented:

“Today, we’re on the cusp of some big changes. With the FCA’s PPI complaints deadline of 29 August 2019 less than two months away, we’ve been preparing for a future when PPI doesn’t dominate our caseload, while knowing there’s still hard work ahead to bring it to a conclusion.

“Our service tripled in size in response to PPI. Assuming something on that scale doesn’t happen again, we’re planning on the basis we’ll be a smaller organisation in future. So, in combination with our focus on finding efficiencies and smarter ways of working, we expect the overall cost of our service to fall.”

The consultation ends on Tuesday August 13. A summary of the responses will be issued later this year, and the changes that the FOS decides to impose will be confirmed in its ‘strategic plans and budget consultation for 2020/21’ which will be published in December 2019.

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