Regulation  

Ombudsman budget increases from original estimate

Ombudsman budget increases from original estimate

Following a stakeholder consultation at the start of the year, the Financial Ombudsman has confirmed its budget for the coming financial year, with a slight increase from the plans put forward in January.

Taking into account feedback received, the operational income budget for 2015/2016 has been set at £223.9m, up from the estimated £220.7m, but still an 11 per cent decrease from the 2014/2015 budget.

This budget will of course be funded by a combination of levies and case fees. As originally proposed, the overall levy for the ‘compulsory jurisdiction’ has been frozen at £23.3m, while the levy for ‘voluntary jurisdiction’ will also remain at £600,000.

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The Financial Conduct Authority will be consulting separately on the allocation of the levy for the compulsory jurisdiction. The ombudsman expects to receive around £51m in case fees, of which around £700,000 will come from the voluntary jurisdiction.

In terms of expenditure, staff and staff-related costs were budgeted to be £220m, with professional fees of £6.2m, IT costs of £7.3m and premises and facilities costing £25.3m

It estimated the number of new cases at 286,000 while the number of resolved cases was put at 398,000.

Although there remains a great deal of uncertainty about future payment protection insurance complaint volumes, the consensus among those responding to the consultation was in line with expectations of receiving around 150,000 PPI complaints.

The number of cases of packaged bank accounts expected was revised up to 30,000 from an originally assumed 18,000 due to feedback received.

A number of responses highlighted pensions as an area where the ombudsman may see increased complaints, in light of the at-retirement reforms which come into effect in April. This follows the Fos’s call in January for industry views on whether there will be a rise in pension-related complaints.

Other possible areas of complaint activity mentioned by stakeholders included cases involving the affordability of mortgages and claims made under section 75 of the Consumer Credit Act.

peter.walker@ft.com