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FOS to freeze levies while cutting £30m in costs

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The Financial Ombudsman Service plans to spend £30m less next year, but levies on the financial services sector will remain the same.

The disputes adjudicator is projecting total operating costs of £263.5m for 2017/18, down nearly £32m from the £295.2m it originally proposed in its budget plans.

Levies will account for £27m of FOS’ income, the same as the original proposals and in line with 2016/17.

FOS has decided to freeze its individual case fee of £550 for the fifth year in a row, which should generate £71m, while the group account for the most complained about businesses will bring in £143.8m.

£9m of the spending cuts are set to come from staff and staff-related costs, which will fall from £165.5m and £156.2m.

FOS slashed more than 600 jobs over 2016, a Freedom of Information Act request earlier this year revealed.

Contractor staff are now budgeted at £48.7m, compared to £70.1m in FOS’s first proposals.

The changes were made after FOS put its budget plans out to consultation between December and January.

Pension complaints on the horizon

Compared to when the budget was put out to consultation, FOS now expects 60,000 fewer new cases in total, but is predicting an increase in pensions and investment complaints from 13,100 to 16,000.

FOS says respondents to its consultation had discussed charges, pension transfers and drawdown as possible areas for new complaints.

FOS says: “Pensions and annuities were suggested as other areas where we might see more complaints, given the recent media attention they’d received. Our stakeholders also put forward a number of issues we hadn’t specifically mentioned, which they thought might result in complaints. These included problems arising from new legislation around money laundering and payment services, fees and charges, fraud, hire purchase, and pension transfers and drawdown.”

The FOS added that freezing levies and case fees would not affect the quality of its service, and was still a fair way of charging businesses.

“Overall, we think our arrangements remain fair and proportionate: because of our free case allowance, more than nine in ten of the businesses whose customers complained to us didn’t actually pay any case fees last year. However, we’ll continue to talk to our stakeholders in the coming months and keep an open mind about options for the future.”

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