The Financial Ombudsman Service (FOS) has published a feedback statement in relation to its Future Funding Discussion Paper. FOS has operated under 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.
- 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.
FOS has confirmed that it will not take forward a number of options it had previously considered:
- pursuing legislative changes to enable it to charge professional representatives
- charging businesses for delays due to non-compliance
- discounts for bulk closures
- charging case fees based on case complexity
- charging more for upholds or by the size of the business.