The way the Financial Ombudsman Service is funded will need to change as its PPI case load diminishes says FCA chairman Charles Randell (pictured).
MPs on the Treasury select committee asked senior regulators at the watchdog whether the current funding model of the ombudsman is sustainable.
In response to the question Randell said: “FOS has indicated this is the year it needs to move from managing a heavy PPI claims workload to a different one.
“As the PPI workload comes down FOS’s financial requirements and funding structure will need to change to reflect the different cases it will receive.”
People who believe they were missold PPI have until August this year to lodge claims with the regulator.
More than £31bn has been paid out to customers since the introduction of PPI complaining rules in 2011.
Randell went onto explain the FCA’s oversight committee he chairs is having ongoing discussions with FOS’s board about how it is funded in the future.
He said funding and sustainability appeared in the independent review of the FOS carried out last year by Money and Mental Health Policy Institute vice chair Richard LLoyd.
When asked about his view about the best way to fund FOS, Randell said he could not answer the question in detail as these are still being worked out.
He added: “I will write to MPs about the possible timeline for when FOS’s proposals would be introduced. At this stage their plans appear to be on track and we [the regulator] want to be sure they are right as FOS provide an invaluable service.”