Organisation proposes funding overhaul as it expects to become smaller organisation after the 29 August deadline for PPI complaints.
A consultation looking at major changes to the way the Financial Ombudsman Service (FOS) is funded is closing for responses from the industry today (13 August).
The FOS proposals include rebalancing the proportion of the income it gets from levies compared with case fees, changing the number of free cases per firm and maintaining reserves of a minimum of six months’ operating income.
Currently, 85% of FOS funding comes from case fees and 15% from the levy. The organisation is proposing to rebalance this to 50% from case fees and 50% from levy.
This follows a consultation from January where the FOS looked at increasing its income for 2019/20 by near doubling its levy.
The Ombudsman is also looking at reducing the number of “free” cases, where firms do not pay a case fee, from 25 cases per firm to ten.
According to the organisation, any changes will be effective from April 2020 and will be included in its strategic plans and budget consultation for 2020/21, which will be published in December this year.
The consultation was launched in order to look ahead to a time when the FOS no longer receives mass volumes of complaints about payment protection insurance (PPI).
Last October, the regulator reported that £3.7bn had been paid out in compensation to customers since the launch of its PPI campaign fronted by Arnold Schwarzenegger.
Caroline Wayman, chief ombudsman and chief executive of the FOS, commented: “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.”
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