Financial Ombudsman Service (FOS) publishes its 2023/24 Plan and Budget Consultation

FOS has published its Consultation Paper for its plan and budget 2023-2024. The closing date to respond is 31 January 2023.  The Consultation sets out the projected demand for FOS services and how this will be funded.

FOS is proposing to freeze the levy and case fees at the same level as last year through cost and efficiency savings. It estimates a cost per case of £1,176 but is looking to reduce unit costs further.

FOS expects to receive 183,000 complaints in 2023/24, compared to 165,263 actual complaints in 2021/22 and 155,000 forecast for 2022/23.  The bulk of this increase is in banking and credit with an expected rise in irresponsible and unaffordable lending complaints, given the impact of rising interest rates together with an expected rise in disputed transaction complaints.

Although the projected numbers for insurance are fairly stable at 38,050 for 2023/24, compared with 40,242 actual in 2021/22 and 37,700 forecast for 2022/23, this is only an estimate and there are a number of factors that could significantly change this number as FOS indicates, such as:

  • a rise in building and general insurance complaints, to pre‑pandemic levels
  • an increase in insurance pricing complaints, following rule changes from the start of the year
  • a rise in insurance claim complaints related to increased cost and supply issues for parts and labour for example in motor insurance
  • the tendency for consumers to reduce the cost of their insurance premiums without realising the impact of the type or level of cover provided
  • a rise in issues around misrepresentation and insurance fraud

Alongside this there is also the rising cost of living which may make customers more likely to complain.

In terms of funding the levy will be £106m which is aimed at recovering the fixed overheads of FOS such as IT, property, support staff, such as HR and communications, as well as casework senior management.  Case fees will be £750 per case with firms getting 3 free cases.

FOS is proposing to maintain the above funding structure on the basis that it is simple to understand, does not deter customers from complaining and is more of a “polluter pays” principle, in that those who have more cases pay more.

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