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Financial Ombudsman Service publishes Feedback Statement on Future Funding Discussion Paper

Link(s):Financial Ombudsman Service publishes Feedback Statement on Future Funding Discussion Paper (financial-ombudsman.org.uk) Financial Ombudsman Service – Funding Feedback Statement 2022 (financial-ombudsman.org.uk) Financial Ombudsman Service – Funding Consultation 2022 (financial-ombudsman.org.uk)

Context

The FOS has retained the same funding model that was established when it was set up in 2000. Since then, there have been dramatic changes in financial services, consumer expectations and behaviours, and in technology. These changes, coupled with the end of payment protection insurance (PPI) complaints, mean that the casework it receives now is more diverse and open to volatility, both in terms of the volume and type of complaints.

In 2021, FOS published its Action Plan for changing and improving, in which it stated it would “consider revisions to the funding model to incentivise constructive behaviour in industry”. In the Discussion Paper, it set out options it thought could help with this, and asked stakeholders to consider the options and comment.

Key points to note

  • 58 responses were received from stakeholders.
  • In the FOS’ 2023/24 Plans and Budget consultation, it will consult on the following proposals
    • Changing the compulsory jurisdiction (CJ) levy and voluntary jurisdiction (VJ) levy to recover fixed costs, i.e., costs that do not materially change with volume.
    • Introducing a 12-month time limit for disputing case fees.
    • Trialling changes to the group fee account arrangements mentioned in the Discussion Paper.
  • It will continue to assess and improve its processes to enable differential case fees, with a view to consulting in its 2024/25 Plans and Budget consultation on the following proposals:
    • Differential case fees by case stage and/or by product type – this will be based on modelling undertaken over the next 12 months.
    • Charging an initial case fee at conversion

Next actions

None – for information and awareness.