Each year, the Financial Ombudsman Service (FOS), publicly consults on their proposed plans and budget for the coming financial year. You may be aware that, on 15th December 2021, the Financial Ombudsman Service (FOS) opened a Consultation in relation to their Budget and Operational proposals for the year 2022/23.
Within their Budget Plan, the FOS highlighted their continuing challenges in relation to high complaint caseloads, resource and costs. The plan highlights that actual complaints received year on year, have far exceeded their forecasted numbers. This, coupled with high ‘per unit cost’ i.e. the cost of dealing with each complaint, and resource issues, has meant that the FOS have continued to operate at a financial deficit over a number of years.
Their key priorities for 2022/23 are ‘centred around improving productivity and prevention, to remain sustainable, reduce waiting times, and address our backlog’. Consequently, FOS have proposed a number of significant changes which firms should be aware of. These proposed changes include:
- An increase of circa £10million in Compulsory Jurisdiction Levy- This is the fee that regulated firm’s pay via their annual FCA invoicing. Firms will, therefore, likely see a small increase in this levy. The additional income is earmarked for resource and process improvements which FOS state will lead to improved productivity and complaint handling times.
- A reduction in the number of ‘free’ complaint cases for firms, from 25 to 3 (for firms outside the ‘group account fee’ arrangement).
- A reduction in the number of ‘free’ complaint cases, from 50 to 15 (for firms in the ‘group account fee’ arrangement).
- The individual case fee will remain at £750 per complaint (after the initial 3 free cases).
- With effect from July 2022, FOS will expand the scope of their Voluntary Jurisdiction to include Funeral Plan providers and/or intermediaries. A new fee block for charging a Levy to these firms will be introduced and is currently proposed at a £75 annual levy. The number of ‘free cases’ and ‘per complaint’ costs apply as proposed above. These changes were first consulted and announced in Policy Statement PS21/8 (Regulation of funeral plans: Feedback to CP21/4 and final rules).
- The FOS do not anticipate an increase in their Voluntary Jurisdiction members or fee levy, mainly due to Passporting firms moving to the Temporary Permissions Regime (TPR) or not continuing with services provided into the UK.
The consultation will close on 31st January 2022, with the final Policy Statement expected by the end of March 2022.
Additional take-aways from the FOS’s plans are as follows:
- The FOS in currently being led by the Interim Chief Executive and Chief Ombudsman, Nausicaa Delfas.
- Nausicaa talks in-depth about the upcoming plans to reduce waiting times for customers, handling continued increased demand and focusing on cost effectiveness to remain financially sustainable. The FOS anticipate that this new focus will result in a circa 25% improvement in productivity.
- Since the start of the pandemic, the FOS has seen a significant increase in the number of complaints it is handling- This is 90,000 more complaints than were originally expected for that period.
- The FOS’ expected cost base for 2022/23 is £293.8million- an increase of circa £44million from 2021/22.
If you would like to read the full Consultation, and/or submit a response, you can do so here.