Ombudsman freezes levies and case fees again

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Ombudsman freezes levies and case fees again

The Financial Ombudsman Service has frozen its levies and case fees for another year.

It has also kept the 25 “free cases” allowance which, it said, will mean nine out of 10 firms will pay no case fees at all.

These decisions mean the Fos’s income will rise from £228.1m to £241.9m in 2017/18.

As a result it has increased its costs from £248.7m to £263.5m.

One of the main areas of cuts will go up are contractor staff, where costs will increase from £39m to £48m.

In its business plan for 2017/18 the Fos said: “We’re mindful of the different views that exist about our funding model – in particular, whether complaints resolved more quickly should incur lower fees.

“But in practice, we think this would come with its own complexities, which would need to be carefully evaluated first.

“For example, we’d need to decide what the cut-off point should be between an ‘early’ and a ‘standard’ resolution.

“And once any new arrangement was in place, a lot of time and effort might then be given to working through differences of opinion about individual cases – which isn’t the point at all.”

In 2015 the Fos admitted its operating model was not sustainable because it was making a loss due to the large number of payment protection insurance claims which it was funding through its reserves.

The Fos is still projecting a loss of £21m for 2017/18 and will not be returning any reserves.

It has predicted that complaint volumes will remain “relatively steady” during 2017/18.

It said the only exception to the “overall stability” it was predicting was complaints about packaged bank accounts, which have been predicted to fall after the Fos sent claims management companies “clear messages” about the merits of these cases.

damian.fantato@ft.com