The Financial Ombudsman Service (FOS) has published its Strategic Plans and Budget for 2020/21 confirming in it that it intends to raise a levy of £83.9 million from firms that are in its compulsory jurisdiction in the coming year. BIBA members may access the document by clicking here.
The FOS said the plans and budget presented in the document were consulted on before the widescale outbreak of Covid?19 (coronavirus) in the UK. Having discussed the position with the Financial Conduct Authority, the FOS had adjusted its budget and funding arrangements to help mitigate the financial pressures on firms. The revisions represented: ‘a combination of targeted interventions to benefit smaller firms, and broader steps to benefit other firms that contribute to its funding’.
The aspirations of FOS remained to deliver the plans set out in the strategic plans and budget, as well as to provide the effective service people and firms expected from it.
Highlights from the Strategic Plans and Budget 2020/21 include:
- The FOS has asked the FCA to freeze the minimum levies at their 2019/20 levels.
- Businesses outside the group account fee will not be charged for the first 25 complaints received from their customers – maintaining ‘free’ cases at their current level, rather than reducing this to 10 as proposed in its December 2019 consultation. This means that nine out of ten firms will not pay any case fees.
- The individual case fee will rise to £650 from £550 (the first increase since 2013) for all cases closed after 1 April 2020, regardless of when the case was referred to the FOS.
- Groups in the group account fee arrangement will not be charged for the first 50 complaints received from their customers.
- An increase in the proportion of the funding it receives gets its case fees compared with current levels. In future 70% of its income will come from case fees, with 30% coming from its levy – compared with a proposed split of 60:40 in its December consultation, and a longer?term aim of reaching a broadly 50:50 balance.
- To absorb the cost of these changes, FOS said it would use more of its reserves than originally proposed – around £25.4 million.
Chapter 11 of the FCA’s Consultation Paper 20/06 (CP20/06) set out how the general levy for FOS will be allocated between industry blocks. The general insurance intermediation industry fee block (I017) has been apportioned 8.9% of that levy.
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