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financial ombudsman consults on its plans and budget for the year ahead
The Financial Ombudsman Service recently publishes for public consultation its proposed budget for the next financial year (2011/2012) – together with an update on the numbers and workload for the current financial year (2010/2011).
The budget sets out how the ombudsman service plans to deal with a potentially volatile caseload of between 152,000 and 208,000 cases in 2011/2012. This compares with the 180,000 consumer complaints that the ombudsman expects to resolve in the current financial year.
The volatility in complaint numbers is largely driven by cases involving payment protection insurance (PPI). So far this year the volume of PPI complaints is significantly higher than originally anticipated – with 68,000 PPI complaints now forecast for 2010/11, substantially in excess of the 46,000 cases budgeted for.
Complaints about certain other financial products (for example, investments) continue in a downward trend. But there has been a general shift towards more complex and harder-fought cases – with higher proportions requiring a formal decision by an ombudsman.
Taking into account the rise in PPI complaints, the total number of cases referred to the ombudsman service in the current financial year (2010/2011) looks likely to be 7% higher overall than in the previous year.
To deal with the volatile levels of demand being forecast for its service in 2011/2012, the ombudsman is likely to need a budget of between £90 million and £116 million – compared to a forecast of £101 million in 2010/2011.
As part of its plans for funding the service in 2011/2012, the ombudsman proposes freezing case fees and the total levy paid by the financial services industry – for the second year running. This means that the case fee – paid only by the small minority of businesses that have four or more complaints referred to the ombudsman service during the year – will again be frozen at £500.
These proposed budget arrangements are dependent on the ombudsman receiving the types and numbers of cases set out in this consultation. They do not take into account any additional costs that could arise in connection with the British Bankers Association’s upcoming judicial review of PPI-related matters.
The consultation also sets out the ombudsman’s plans for continuing to develop its levels of service in line with the expectations of users and stakeholders – including increased transparency and helping the financial services industry improve the way it handles and learns from complaints. This work will be funded through further cost-reduction drives, resulting in efficiency savings of 10% in 2011/2012.
For media enquiries, phone Phillipa Cook or Martyn James on 020 7964 1234 (for out-of-hours media enquiries, please call 07718 658 306).
consultation opens on ombudsman's plans and budget for 2011/2012