The Financial Ombudsman Service said its expected operating expenditure, excluding restructuring, will fall to £223mn for 2023 to 2024.
In December, the Fos set out that it expected its cost base to be lower than previously forecast, projected at £231mn in 2023/24, compared to £238mn forecast in 2022/23.
However, in its plans and budget consultation, published last week (March 31), the Fos said following consultation, it increased the number of resolutions planned in the year by 8,000, which equates to £5mn of additional cost, and moved some transformation spend, equating to an additional £5mn.
“These additional costs in 2023/24 have been offset as we stretch ourselves further on our cost base, identifying £12mn of cost reductions to offset these increases,” it said.
“This has resulted in a planned operational expenditure of £223mn, down from £232mn Q3 forecast in 2022/23, and non‑operational items (finance income and costs, restructuring) of £6.3mn, up from £4.6mn Q3 forecast in 2022/23.”
The Fos also said it is expected to receive 184,000 complaints and anticipates resolving 204,000 complaints.
In December, the Fos set out its expectation that projected income for 2023/24 would be £240mn based on the levels of resolved cases - a reduction against the 2022/23 forecasted income of £252mn.
As a result of the changes in volume of resolved cases, it now expects 2023/24 income of £245mn, in line with 2022/23 income of £246m.
The Fos said: “Our numbers have evolved slightly since we published our consultation, due to more data being available about 2022/23.
“Together with the higher new complaints forecast, in order to achieve our ambition of a stock position being no more than three months worth of new complaints, we are now targeting a higher volume of resolved complaints.”
The Fos is forecasting a range from 157,000 to 220,000 complaints received, and using 183,000 as the basis on which it has constructed its budget.
For investment and pensions, it anticipates receiving 17,300 complaints, up from the 2022/2023 forecast of 14,000.
It said this was down to an increase in complaints about the suitability of advice to transfer pensions, following coverage of the British Steel Pension Scheme (BSPS) consumer redress scheme and increase in scams involving investments and cryptocurrencies.
Other trends the Fos noticed was a rise in complaints relating to surrender and execution delays and overall impact of market performance.
Of the 184,000, the Fos anticipates 127,200 for banking and credit, 38,050 for insurance (including PPI) and 450 for complaints about CMCs and funeral plan providers.
“As a demand‑led service, it can be challenging to forecast complaints accurately,” the Fos said.
“Our analysis is based on taking 2022/23 received volumes as our baseline and then adding the potential impact of novel issues or trends (for example, increases in the cost of living). Based on this, we expect to receive 183,000 complaints in 2023/24.”
In the document, the Fos also confirmed that it will freeze the levy and case fees at their current levels.
In December it announced the freeze, saying it recognises the pressures on businesses.
The Fos’s compulsory jurisdiction levy (CJ) will be maintained at £106mn, and the voluntary jurisdiction levy (VJ) will be reduced from £700,000 to £600,000.
Case fees will also be flat, at £750.
Cost of living
Currently, the Fos has yet to see a significant increase in complaints related to cost of living pressures, it explained.
“We are mindful that customers are more likely to complain during times of financial uncertainty, such as the Covid‑19 pandemic.
“Factors exacerbate this, such as the growth of fraud and scams.”
The Fos said at such times, customers and businesses are also less tolerant of loss, which can prolong the dispute resolution process.
“Given this uncertainty, we have already started working with stakeholders, particularly large banks and insurance companies, to understand their complaint forecasts,” it said.
“We anticipate a lag in increased volumes, as there is a delay between when an issue or dispute first arises and when a complaint is referred to our service.
“As part of this consultation, we would welcome any additional views on the likely causes and impact of the rising cost of living.”
sonia.rach@ft.com
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