FOS considers its future funding model

The Financial Ombudsman Service (FOS) has opened a discussion with industry about possible changes to its funding model which will ensure its future fitness and that it more closely reflects the actual cost to the ombudsman of dealing with different types of complaints.

The FOS committed to consider revisions to its funding model, including those that might incentivise constructive behaviour by the industry, to resolve cases more quickly, and to ensure the financial sustainability of the FOS in the Action Plan that it published last year, and following recommendations from an independent periodic review.

The discussion paper seeks views on a series of options for updating the levy structure for 2023/24, these include: changing the compulsory jurisdiction levy to allow the recovery of fixed overheads such as IT; simplifying the voluntary jurisdiction levy by charging a fixed fee for all participants in future; whether the FOS should retain its single, flat case fee or move to a differentiated case fee model; whether different case fees should be charged according to the stage the case has reached before it is resolved or might this create unhelpful incentives?; whether case fees could be varied according to the type of product the complaint relates to; and updating the group account fee arrangements;

The FOS also shared ideas for future funding beyond 2023/24 which might include: charging professional representatives such as CMCs to bring a case to the ombudsman; the potential for differentiated fees; and the introduction of supplementary fees for ‘uncooperative’ firms.  There is also a section about ideas that the FOS have already considered but has decided not to pursue to prevent respondents going over unfertile ground.

A feedback statement will be published in October 2022. The FOS will also take feedback into account when consulting on its budget for 2023/24 in December 2022.

Comments about the paper should be emailed consultations@financial?ombudsman.org.uk

to the FOS by Friday 5 August 2022.  Members can find more information here.

BIBA will be submitting a formal response to the discussion paper.  Members who would like their views taken into account as part of this process should send to David Sparkes atsparkesd@biba.org.ukby close of business on Wednesday 27 July 2022.

BIBA members’ compliance and regulation queries should be directed to: compliance@biba.org.uk quoting their membership number.

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