Fos raises case fees to cover record number of complaints
The Financial Ombudsman Service (Fos) is to increase its case fees to between £450 to £500 next financial year in preparation for a record number of complaints.
The ombudsman's proposed budget for the 2009/10 financial year, published today (15 January), revealed that it expects a 44 per cent increase in the number of disputes and to settle a record 165,000 complaints from consumers during the year.
This compares with the 115,000 consumer complaints which the ombudsman expects to resolve in the current 2008/09 financial year.
As a result of the increased workload, the Fos forecasts operating costs to rise from £62.7m in 2008/09 to £92.5m in 2009/10. This amount includes the cost of 300 additional adjudicators needed to help resolve the expected 165,000 complaints.
This increase will be met mainly by the increased case fees of between £450 to £500 paid by financial firms. Firms will, however, still receive the first three cases free.
Overall, the ombudsman predicts that the average cost of handling a case will rise by 2.8 per cent to £559 in 2009/10, up from £544 for the current year (2008/09).
The Fos said the increase in the volume of complaints expected to be referred, and therefore costs, reflects the anticipated impact of the deepening recession and turbulent economic conditions.
It is expected that the number of consumer complaints to rise across most areas covered by the ombudsman.
Disputes relating to mortgages are forecast to increase by 78 per cent to 16,000 cases, while disputes relating to current accounts are forecast to increase by 38 per cent to 18,000 cases.
Complaints regarding pensions and investments are forecast to increase by 41 per cent to 24,000 cases, and motor insurance complaints are expected to increase by 57 per cent to 11,000 cases.