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FOS considers “rebalancing” levy and case fees in funding consultation

The Financial Ombudsman Service (FOS) has proposed shifting the ration of levy and case fees to 50:50 – from the current 85:15 as part of a consultation on how it is funded.

Its other key proposals include changing the number of free cases to 10 per firm, and to 50 for each group within its group account fee arrangement. It also proposes to keep six months’ income as reserves – as opposed to the current three months.


“We’re a public service that operates as a not‑for‑profit company – paid for by the industry we cover, yet independent and unbiased,” FOS chief executive Caroline Wayman said. “Given these dynamics, it’s not surprising that, for as long we’ve existed, our funding has generated discussion.”


“Our service tripled in size in response to PPI. Assuming something on that scale doesn’t happen again, we’re planning on the basis we’ll be a smaller organisation in future. So, in combination with our focus on finding efficiencies and smarter ways of working, we expect the overall cost of our service to fall.”


The FOS has attracted criticism from alternative lenders over the number of complaints its has received from claims management companies (CMCs) over the historical activities of high-cost, short-term lenders. Currently, each case that the FOS processes costs the lender approximately £500.


Complaints made to the FOS over high-cost, short-term lenders soared by 130 percent in 2018-19, according to its annual report.


There were nearly 40,000 new complaints brought last year about high-cost, short-term credit, up from 17,000 the previous year.


The Consumer Finance Association (CFA) said in a statement following the FOS’s annual report that it “continues to see many a complaint that has no foundation”.

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