Financial Ombudsman Service  

Fos proposes changes to levy funding structure

However, the reality is that some cases cost much more than its current £750 case fee to resolve, while others cost less. 

“We want to review whether a differentiated case fee model would more effectively ensure that the financial business against which a complaint has been made pays the costs of their complaints,” it said.

“We also want to understand whether it would incentivise firms to engage with us more constructively.”

Differentiated case fees could allow the Fos to more easily recover the costs of dealing with a case based on how many stages in its casework it needs to go through, or how complex the case is.

In the short term, it is proposing to explore some simple changes which will balance the need to have a case fee model that reflects the costs of dealing with different kinds of complaints.

“At the same time, we want to make sure that the impact of any changes – administrative or otherwise – are proportionate. The different fee structures that follow are not intended to be mutually exclusive and could potentially work in conjunction.”

The alternative would be to retain the current flat case fee model, which the Fos said is a very simple approach to understand and requires no changes to existing processes.

“This administrative efficiency fits with our broader goal of being an efficient organisation,” it said. “We would need to review the case fee amount in light of any changes to the levy because the two are interdependent and, in combination, need to cover our operating costs. We also need to consider whether our fees should increase with inflation.”

Another option which the Fos said has been well received by stakeholders is to charge a different fee depending on the stage at which a complaint is closed. 

It said cases often become more expensive as they work their way through the process as additional resources are spent on them and expense reaches its peak if complaints go to an ombudsman for a decision. 

“Charging by case stage, therefore, helps to ensure that the full costs of a particular case are recoverable, and should be relatively straightforward to implement.

“ As the fees would only be designed to cover our costs, there would not be an incentive for us to push complaints to the final decision stage.”

The Fos is consulting on a number of different approaches to the case structure and will be open for responses until August 5.

A feedback statement will be published in October. 

sonia.rach@ft.com 

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