FOS levy to be frozen for next financial year

12 January 2010 | By Robert Thickett

It predicts the number of disputes it deals with to rise by 27% in 2010, which would see it settling a record 210,000 complaints. It expects to resolve some 165,000 disputes in the current financial year, which itself is a 44% increase on the previous year.

As a result of the continued growth in the FOS’ workload it says there will be an increase in operating costs from £96.6m to £113.5m. This includes the cost of 300 additional casework staff needed to help resolve the expected 210,000 complaints.

But the average cost of handling a case, taking all overheads into account is forecast at £587 for the current year 2009/10 and is expected to fall by 8% to £540 in 2010/11.

This means that the total levy to be paid by the financial services industry in 2010/11 –raising 20% of the ombudsman service’s funding – will be frozen at the amount levied in 2009/10.

And the case fee – paid by those financial firms that have four or more disputes referred to the ombudsman service during the year, and meeting the other 80% of the ombudsman service’s funding requirement – will also be held down at the previous year’s rate of £500.

The high level of complaints seen in the current financial year has mainly been driven by payment protection insurance complaints, with 42,900 predicted for 2009/2010, which compares to the predicted figure of 25,000 in the FOS’ current budget.

And the number of PPI complaints referred to the ombudsman service is expected to continue to rise to 46,000 cases in 2010/11.

Other areas where growth in complaint numbers is expected in 2010/11 are banking - forecast to increase by 16% to 85,000 cases - and consumer credit - forecast to increase by 55% to 10,200 cases.

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