Financial Conduct Authority
|Printable version||E-mail this to a friend|
Financial Ombudsman Service funding arrangements: Feedback Statement
The Financial Services Authority (FSA) and the Financial Ombudsman Service yesterday published a Feedback Statement describing responses to the discussion initiated last year about how the costs of funding the ombudsman service’s compulsory jurisdiction (CJ) could be shared among firms in future.
The responses have indicated that there is broad support for increasing the importance of the case fee - as opposed to the levy - in financing the Financial Ombudsman Service. At the same time, there was support for increasing the number of cases (currently two) which can be considered by the ombudsman service before a firm starts paying case fees.
The FSA and the ombudsman will see what scope exists for moving in this direction when agreeing the ombudsman service’s budget for 2008-09, towards the end of 2007.
In deciding not to make any changes immediately, the FSA and ombudsman have taken account of current budget and caseload uncertainties affecting the ombudsman service. Given these uncertainties, the ombudsman service believes it is particularly difficult to model with any degree of precision how significant changes at this stage would affect either its financial stability or the size of the levy and case fees.
Funding for the CJ is paid by FSA-regulated firms through a combination of an annual levy and case fees, and an FSA/ombudsman joint Discussion Paper (06/2) last May canvassed a range of possible options for reforming future CJ funding based on options around the balance between annual levies and case fees.
NOTES FOR EDITORS
1. Feedback Statement 07/2 Financial Ombudsman Service Compulsory Jurisdiction Funding Review is available on the FSA website.
2. Discussion paper 06/2 Financial Ombudsman Service compulsory jurisdiction: funding review is available on the FSA Website.
3. The proposals in the Paper relate only to the compulsory jurisdiction of the ombudsman service. The ombudsman service also has a voluntary jurisdiction and, under the Consumer Credit Act 2006, now has a new consumer credit jurisdiction. The funding of these other jurisdictions raises distinct issues and will be dealt with separately. They will not necessarily follow the same model as the compulsory jurisdiction.
4. The Financial Ombudsman Service was set up under the Financial Services and Markets Act 2000 to resolve disputes between consumers and financial service firms quickly and with minimum formality. It is a company limited by guarantee without share capital. In the financial year 2007/08 the Financial Ombudsman Service expects to deal with over 100,000 disputes on a budget of £57 million.
5. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
6. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
Press: Robin Gordon-Walker 020 7066 3232
Outside office hours 07795 351 956
Public: FSA Consumer Helpline 0845 606 1234 (call rates may vary)