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FOS sets £191m budget and confirms extra £350 PPI case fee

The Financial Ombudsman Service has set a total budget of £191.1m for 2012/13, and introduced a £350 supplementary case fee for payment protection insurance misselling complaints.

The standard case fee for next year has been frozen for the third year at £500. Firms are charged the case fee for the fourth and any subsequent complaint during the year.

The FOS is also currently consulting on plans announced in January to increase the number of free cases firms are allowed before having to pay a case fee from three to 25 a year. If agreed, the new structure would be introduced from April 2013.

The FOS is funded predominantly by case fees, and is topped up by industry levies.

It has published its approved budget for 2012/13 this morning, following a consultation paper in January.

A £350 supplementary case fee for PPI complaints will be payable when the FOS formally takes on a case, and will be charged where businesses have more than 25 PPI complaints a year.

The FOS forecasts that out of the 260,000 cases it expects to resolve during the year, half will relate to PPI.

Firms who would have to pay the supplementary case fee argued it did not take into account different uphold rates for different businesses, and that the combined case fee of £850 could encourage inappropriate behaviour by claims management firms.

However the FOS argued managing the unprecedented number of PPI cases involved “significant upfront costs”, including recruiting and training large numbers of staff to manage the complaints.

The supplementary case fee will be introduced on April 1.

The FOS says it accepts that PPI case volumes may change after 2012/13, so will review the need for a supplementary PPI case fee next year.

FOS chief executive Natalie Ceeney (pictured) says: “We need to ensure we have the flexibility and resource to deal with unprecedented volatility in complaints volumes.

“Over the past few months we have been seeking the views of stakeholders about the challenges ahead. This has helped us review our plans for the future – and decide where we need to spend our time and money in developing and strengthening our service.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. This really is going to open the floodgates for claims chasers chancing their arm, knowing full well that it is not going to cost them anything in fees but the providers will pay £350 per case. This will also probably make the providers roll over just as they did with endowment and pension complaints. Claims chasers really do need sorting. I have heard of many cases where they have written to a provider cliaming misselling when the client did not have PPI in the first place.

  2. I have no problem with the FOS but sometimes decisions are bad for the industry and this is one of them. Had they introduced a fee for all the ambulance chasing firms to submit a spurious claim I would not have an issue with the extra cost.

    But in a large number of cases we will be paying £850 for nothing and just to keep an ambulance chasing firm alive.

    There needs to be a balance and there isn’t any at present because nobody is saying there should be.

  3. With the enormous back log at FOS and their wiilingness to accept any case just becuase it is a complaint and regardless of whether adjudication is actually required just so they can charge a case fee many cases will charged at the new rate even though when they were accepted the old rate applied. The amount charged should be decided by the date of acceptance not the date of decision when the charge becomes due. FOS can now deliberately delay decisions so that they incur the new charge.

  4. Is this April 1st?? What a joke! Why dont they start shutting down the @ambulance chasing firms’ that are costing this industry millions????!!!???!!!?!

  5. The FOS should implement a system where any claim coming in from a claim chasing company should be accompanied by a payment of £50 which will be refunded if a claim is successful. That would stop these leeches in their tracks. Of course the cynical of us would say; the FOS is very happy to get all these complaints as its keeping them all in a job. (For life)

  6. Better still, why does the FOS not just advise the public that it costs them nothing to make a complaint and outlaw claims from ambulance chasers? A complainant can take their complaint to the County Court if rejected by the FOS. The ambulance chasers can then get involved. I sometimes think my common sense approach makes me a good adviser, but I would be hopeless as an ombudsman!

  7. I disagree think the blame restwith any “Abulance Chasing” frim. They are simply representatives acting on behalf of indiviudals are able to execise such claims in their own right.

    It is otherwise iniquitous to suggest that such firms should not exist or be subject to addtional costs and that individuals should rely on their own abilities to seek redress (imagine if we applied such a philosophy to legal representation). If wrongful claims are allowed it is the system that is at fault.

    If true blame is to be apportioned it should be considered:

    1. Whether the FOS is considering the claims objectively and effectively by separating the genuie claims from those who received a good recommendation. Which may als not be the case here

    2.. Which firms really did sell to those on the basis of reason like “it helping to assist a loan application” or to people who would not be able to claim on the policy …..and there were such firms!

  8. The FOS is a business, without complaints to deal with they are out of a job!!
    Once the PPI misselling is over they will be canvasing for the next big thing….Have an Interest only mortgage? you could be entitled to claimif it was not explained….
    Annuity, were you given ALL the options…you could be entitled to…
    Pension transfer, were you given ALL the options ???

    The list goes on and on

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