Ombudsman to cut 2014/15 budget by 20%

The Financial Ombudsman Service (FOS) plans to cut its budget by 20% for the 2014/2015 year of account, which begins on 1 April.

The consumer complaints handler also plans to freeze its levy at the current level of £23.3m, and keep the case fee paid by companies after the 25th case at £550.

The FOS is also planning to extend the group account charging system to four more of the biggest companies, which means three-quarters of its expected workload will be paid for on this system.

The four biggest banks are currently on the group account system, which was introduced at the start of the 2013/2014 financial year.

In addition, the FOS will also drop the £350 supplementary case fee it charges companies for handling complaints about payment protection insurance (PPI).

The ombudsman has had to ramp up its resources to cope with the volume of PPI claims, but now feels it has sufficient resources to tackle the workload.

The FOS expects to answer 1.8 million front-line customer enquiries in the 2014/2015 year and resolve a record number of 320,000 PPI cases.

It also expects to handle 64,000 new banking complaints and 32,000 new insurance cases, as well as 150,000 new PPI cases.

Interim chief ombudsman Tony Boorman said: “For the last few years our focus has been on building up our capacity to meet the unprecedented challenges of PPI.

“The investment we have made in scaling up and developing our service is now paying off as we plan for another year of record activity, resolving twice as many PPI cases as we receive. But we’re not out of the PPI woods yet.

“While we expect the volumes of PPI complaints to decline, the numbers are still likely to be substantial. Our plans take this into account – but we will still be relying heavily on the patience of consumers and the co-operation of businesses before we will be able to draw a line under the PPI saga.

“Across all of our work we continue to hear that people’s dealings with financial businesses remain strained, suggesting a lot more work is required to restore consumer trust in financial services.”