The Financial Ombudsman Service is increasing its individual case fee from £650 to £750 for the year ahead.
Because the fee applies from the date of a judgement being made by the ombudsman, that means that the higher costs will apply to all the cases currently in the complaints backlog.
The figure was confirmed in the FOS’s strategic plan and budget for 2021/22, published today, and was at the top end of the £650-£750 range proposed in its consultation in December.
The compulsory jurisdiction levy has been set at £96m, which is in the middle of the range proposed in December.
The voluntary jurisdiction levy is expected to raise £1m, slightly below the £1.1m projected in December.
The ombudsman’s cost base for the year ahead is £260m.
FOS says that it expects to have resolved in excess of 95 per cent of the volume of cases it had originally planned to in its general casework.
However, it says the pandemic has contributed to a substantial increase in the number of new complaints it received in 2020/21 – forecast to be at least 45 per cent higher than expected at the beginning of the 2020/21 financial year.
Outgoing chief ombudsman Caroline Wayman says: “Our final 2021/22 budget involves a smaller levy increase than our consultation base case – balancing the need to fund our service appropriately and protect
against the risk of in‑year funding requests, with our recognition of the pressures facing firms and the need to provide certainty around their contribution.
“The solution we’ve reached also retains an increase in our case fee – reflecting the strong support respondents expressed for this facet of our funding.”
The plan was published on the same day as a scathing report from the Institute of Economic Affairs calling the service “unfit for purpose” and in need of “major reform”.
The think tank claims that the organisation is failing to deliver on its primary objectives of “providing fair and reasonable resolution of disputes at speed” and “providing value for money and supporting competition and consumer welfare”.
It comes after chief ombudsman Caroline Wayman announced her resignation earlier this month amid a backlog of complaints.
The FOS is also in a consultation process over plans to make 150 staff redundant.
Responding to the IEA report, a spokesperson for the ombudsman says: “Since the Financial Ombudsman Service was set up we have helped millions of consumers resolve their problems with financial businesses.
“In 2020/21, excluding PPI, we received around 50 per cent more cases than we expected to and are currently helping thousands of people with complaints, including many who have seen their lives or businesses impacted by Covid-19.
“We have recruited new staff to help us significantly reduce waiting times for customers and ensure we continue to provide an effective service.
“If anyone isn’t happy with how their complaint to a financial provider has been dealt with, they can come to our service with confidence that we will help put things right.”
