The Financial Ombudsman Service (FOS) has issued its Strategic Plan and Budget document for the 2019/20 financial year, and responses are invited by January 31 2019 to 18 questions on areas such as: its complaints volume predictions, the planned move into handling SME complaints, the impending switch of claims management complaint jurisdiction and the way the Service is funded.
At the start of the document, Chief Ombudsman Caroline Wayman describes payment protection insurance (PPI) as “still necessarily a significant focus for us”, but also says that “if PPI was once the main story, that isn’t the case any longer.” As evidence of this she cites the fact that demand for the Ombudsman’s services is at the highest for five years, even though it has lately been receiving fewer PPI complaints than expected. This is largely due to increases in complaints about IT failures at authorised firms, and rises in the numbers of consumer credit cases, especially those concerning payday and instalment loans.
The document goes on to reveal that the FOS is now expecting only 200,000 new PPI complaints in the 2018/19 financial year, when it had budgeted for 220,000. The FOS also cautions that there may yet be a ‘spike’ in PPI complaint volumes as the August 29 claims deadline approaches and adds that only around one seventh of the PPI complaints it will resolve this financial year will concern the Plevin judgement and undisclosed high commissions.
Regarding short-term lending complaints, the document says that around 50% of these cases are being decided in the customer’s favour, and that the FOS regularly sees cases where lenders have:
- Granted multiple loans to the same borrower
- Failed to ask sufficient questions before agreeing to lend to an individual
- Failed to manage the ongoing client relationship to ensure the loan remains sustainable
It adds that around 80% of short-term lending complaints are now made via claims management companies, and highlights that it has passed on its concerns about the way some CMCs conduct their affairs to the Claims Management Regulator at the Ministry of Justice.
The FOS is currently expecting to receive 382,000 complaints in the 2018/19 financial year, of which 230,000 will concern PPI and 20,000 short-term lending. However, for the 2019/20 annual cycle, which commences on April 1, it expects 460,000 new complaints, an increase of 20%. PPI complaints for the year are predicted at 250,000 and short-term lending complaints at 50,000, a massive increase of 150%.
The Service will be able to receive complaints from SMEs for the first time in 2019/20 and expects 1,300 such complaints. It will also take over from the Legal Ombudsman in handling complaints about CMCs and expects 1,600 such cases.
The case fee will remain frozen at £550, and firms will still have 25 ‘free’ cases per year before any case fees are charged. 56% of firms, mostly smaller firms, should see no change in the amount they have to contribute to the FOS annual levy.
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