The Financial Ombudsman Service has confirmed it will reduce the number of free cases available in order to cut its cost base - despite concerns about the proposal.
The Fos also said its cost base for 2022-23 would be smaller than expected - £291.7mn rather than the £293.8m it had forecast.
But this will still be an increase of 18 per cent on the £249.4mn levied for the current year.
The Fos said it expected to fund this through a levy increase of £10m to £106m and cuts to its cost base.
Alongside this, Fos will aim to raise £11m by reducing free cases against firms to pre‑PPI levels from 25 to three and reducing free cases for group firms from 50 to 15.
As part of the consultation, only two companies - an insurer and a consumer group - explicitly supported the proposal to cut free cases.
Some felt they needed more information behind this decision, and to justify such a major change and increase in funding and 20 firms commented on the proposals, with 19 expressing concern.
The Fos said the majority of all other responses were concerned about its implications, especially to the cost burden and pressure on smaller firms, community development financial institutions, and on those who generate the fewest cases.
However, despite the range of feedback on all of the proposals, the Fos said given the scale of the changes set out in its action plan, and the investment required to deliver on that, it has decided to implement the proposals consulted on.
These changes will take effect from April 1, 2022.
The Fos also announced that the voluntary jurisdiction levy, for firms choosing to be covered by the service, will raise £700,000 next year rather than the previously proposed £950,000.
In the consultation paper in December, the Fos said it anticipated dealing with fewer complaints under voluntary jurisdiction in 2022-23, which would lead to it raising a lower overall levy.
In its consultation last year the Fos anticipated keeping the tariff rates the same as last year and estimated it would receive £950,000 from this levy.
But in its plan and budget for 2022-23 published today (March 30) it has now revised this down to £700,000. This is not only a reduction on its proposals - it is a fall from the £760,000 raised this year.
The Fos said the fall in complaints under this regime was due to the introduction of the Financial Conduct Authority’s temporary permissions regime, which came into force on December 31, 2020 due to Brexit.
Nausicaa Delfas, chief executive and chief ombudsman at the Fos, said: “In the last financial year, we took significant steps to put the Financial Ombudsman Service on a better path for the future. We published our action plan, together with our periodic review, and have been driving down our backlog of cases.
“In the next financial year, we will be investing to make a step change in performance, by developing our technologies and implementing our new operating model. The changes we make will help deliver a better service for all our customers and will allow the organisation to become financially sustainable for the future.”