The Financial Ombudsman Service has published its plans and budget for the next financial year, so FTAdviser took a deep dive to find out what it means for the industry.
1) Case fees freeze
The Fos revealed plans to freeze the standard case fee for the fourth year running, maintaining the current group-account fee arrangements and to keeping the number of free cases at 25.
The standard case fee is £550 for 2016 to 2017 and the PPI supplementary case fee will stay at zero.
Taking all this into account, the Fos plans for an operating income budget of £223.2m for 2016 to 2017, broadly in line with the existing budget and slightly less than its latest forecast of £227.2m.
2) Higher investment and pension complaints
Based on current trends, the Fos said it expects to receive around 15,000 new complaints about investments and pensions this year; around 2 per cent higher than previous assumptions.
The document explained that the complaints it has received about pensions regularly involve people who feel the investment they bought did not match the description they were given and that it continues to get complaints about unregulated investment schemes and other unusual investments.
It added the April at-retirement reforms have so far resulted in a relatively small number of enquiries and complaints reaching the ombudsman.
However, FTAdviser reported earlier this week that the Fos had seen a surge in complaints about pension pay-out delays, many of which relate to delays and administrative issues on the part of pension providers – or problems people are having accessing financial advice.
3) Fee structures may change again
Despite this year’s move to freeze fees for the fourth consecutive year running, the Fos admitted that this may change for the year 2017 to 2018.
This would be partly as a result of the effects of the changes to the Financial Conduct Authority’s complaint handling rules, which state that from 30 June 2016, businesses will have three working days, rather than one, to provide a “summary response” to a complaint.
Additionally, customers will be told about their right to refer their complaint to the ombudsman, meaning it may be contacted at this point. The Fos said that bearing this in mind, it will need to review its current fee arrangements.
It plans to gather evidence and views on this over the next 12 months.
4) Overall case volumes to stabilise
The Fos said that although the volume of new complaints declined in 2014 to 2015, this year it expects numbers to stabilise around the current level.
On current trends, it expects its general casework - that being on complaints that are not about PPI or packaged bank accounts - to reach 105,000 cases for the year; broadly in line with the 106,000 in its plan.
However, it expects to receive 40,000 complaints about packaged bank accounts this year, a third higher than the 30,000 budgeted for.
5) PPI has the been the Fos’ biggest challenge to date.
The Fos admitted that Payment Protection Insurance is the biggest challenge it has faced “by far”, receiving more than 1.5m PPI complaints.
When the Fos consulted on its plans at the start of this year, it was assumed there might be around 150,000 new PPI complaints and stakeholders broadly agreed in their responses.
However, the decline has not been as fast as expected and that by the end of this year, it expects to receive around 180,000 complaints.
In addition, the Fos expects to resolve slightly fewer complaints than last year, reflecting the growing complexity of the PPI complaints it is dealing with.
“Given the scale of the challenge of putting right the fall-out of mis-sold PPI, it’s inevitable that PPI has had some impact across the whole of our service,” read the plans. “But as far as possible, our strategy has been to minimise this impact on complaints about everything else.”
ruth.gillbe@ft.com
