FOS adds extra £3m to budget

The Financial Ombudsman Service has added an additional £3m to its final annual budget for 2013/14 since it consulted in January, bringing the total to £283.6m.

FOS chief executive Natalie Ceeney
FOS chief executive Natalie Ceeney

The figure represents a 93 per cent increase on this year’s £147.2m budget.

The FOS published its final plan and budget for 2013/14 yesterday, following the consultation in January. It initially set its budget at £280.1m, but has now approved a final budget of £283.6m.

The FOS is funded by a combination of case fees, which currently firms have to pay if they have four or more complaints referred to the FOS within a year, and a compulsory levy imposed on all financial services firms. The FOS is also currently charging a £350 supplementary case fee for payment protection insurance complaints.

Most of the cost burden for 2013/14 will fall on the largest firms like banks, which from April will pay a new quarterly group account fee, rather than a standard case fee.

Standard case fees for other firms will increase from £500 to £550, and the number of free cases from three to 25. Both measures will be introduced in April.

The difference in the budget from January compared to the final budget was driven by lower than expected income from case fees and supplementary case fees.

The FOS has also confirmed the levy on financial services firms will go up 30 per cent from £17.7m to £23m.

A FOS spokeswoman says: “The increase in the budget has come from the changes we are making to our payment model and a slight adjustment to the amounts we are likely to see coming in under that model.”