Regulation  

FCA says ombudsman levy is proportionate

FCA says ombudsman levy is proportionate

The Financial Conduct Authority has disputed claims about the size of the levy for the Financial Ombudsman Service.

In its policy statement on regulated fees and levies for 2016 to 2017, the FCA said it would be introducing the levy it proposed earlier this year, under which advisers have to contribute 2 per cent of the total Fos levy of £24.5m - or £490,000.

The regulator said it received seven responses to its consultation on fees, including some who expressed concern about the size of the levy, given that many of the complaints in the relevant area are about payment protection insurance.

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Another comment from a trade body said claims management companies were using the case fee as leverage when seeking redress for their clients.

In response, the FCA stated: “We do not believe that the levy on any particular fee block is disproportionate, given that the levy is a small part of the overall Fos budget, and all levy payers benefit from the existence of the Fos.

“The comments we received about claims management companies and case fees are not relevant to the consultation question, as the Fos consults separately on its case fees.”

The largest contributors to the Fos levy are deposit acceptors and home finance lenders, which pay 47 per cent of the levy, or £11.5m.

Fos, which has a budget of £265m for 2016 to 2017, is funded through the general levy and case fees paid by individual firms, which have complaints handled by the service.

Meanwhile, the FCA will also implement its proposals for the Money Advice Service levy.

Advisers will pay less in 2016 to 2017, because of an underspend for 2015 to 2016 and additional consumer credit contributions, which means the total levy has fallen from £27.6m to £25.7m; meaning advisers will pay £2.9m in 2016 to 2017 rather than £3.1m.

The FCA said it has also been asked how the government’s plans to replace Mas with a new guidance body.

In his 2016 Budget chancellor George Osborne announced that Mas would be scrapped in favour of a new delivery model merging the functions of The Pensions Advisory Service and Pension Wise.

In response, the regulator stated: “We will be consulting in due course about the allocation methods in respect of the levy for the new money guidance body.

“It is expected that the new body will be operational by April 2018 and that it will be accountable to the Treasury with the FCA’s role limited to collecting the levy.”