The Financial Ombudsman Service has said its expected cost base for 2022/23 will be £293.8m, an increase of 18 per cent on the £249.4m levied for the current year.
In a consultation on its strategic plans and budget for 2022-23 published today (December 15), the Fos said it expects to fund this through a levy increase of £10m to £106m and cuts to its cost base.
The voluntary jurisdiction levy, for firms choosing to be covered by the service, will remain £950,000 and the individual case fee will also remain at £750.
The levy increase will see it reach the level previously consulted on in both the 2020/21 and 2021/22 budget cycles. This was not implemented at the time due to the wider financial risks for firms linked to the pandemic.
Overseen by the Financial Conduct Authority, the levy will be payable by regulated businesses and will apply to regulated adviser firms.
Alongside this, Fos will aim to raise £11m by reducing free cases to pre‑PPI levels from 25 to 3 and reducing free cases for group firms from 50 to 15.
Around seven in 10 firms will pay no case fees, down from the nine in 10 firms currently.
“We anticipate an additional £11m of income associated with that change, with around 850 more firms expected to pay a case fee in comparison to 2020/21,” the Fos said.
It said it will use the extra income to help reduce its queue, invest in the digital programme, and implement its action plan.
Nausicaa Delfas, interim chief executive and chief ombudsman at the Fos, said: “In our 20th anniversary as the Financial Ombudsman Service, we are at a pivotal moment. PPI is finally coming to a close. Having resolved over two million cases, we are now transitioning towards a world beyond it.
“Not only does this mark a key turning point for our operations, it also has a significant impact on the funding approach that has underpinned the Financial Ombudsman Service since 2014. As we have said previously, we will no longer be able to rely on the economies of scale generated by PPI.”
Delfas explained the Fos has seen significant increases in non‑PPI cases since the start of the pandemic.
“Incoming volumes of around 90,000 more than we expected over that period have resulted in our backlog and waiting times for customers being too long,” she said.
“We have been making a concerted effort to reduce the backlog as part of our plans for this year (2021/22), but are not expecting a decline in cases, which will continue to challenge that effort.”
In today’s consultation, the Fos said it expects to receive approximately 177,000 complaints including 17,600 about investments and pensions, 500 about CMCs and 2,000 about payment protection insurance.
It said it expects to resolve approximately 210,500 complaints including: 19,700 about investments and pensions, 600 about CMCs and 5,500 about PPI.
The consultation is open until January 31, 2022 and Fos will publish its final plans and budget before the end of the current financial year, after it has been approved by the Financial Conduct Authority.