The Financial Ombudsman Service is cutting its budget by 20 per cent in 2014/15 as complaints are expected to fall.
In its annual plan and budget for 2014/15, published last week, the FOS says it will no longer charge businesses an extra £350 for payment protection insurance claims.
It is also freezing the case fee paid by businesses at £550, which is payable after the 25th case. The industry levy is also being maintained at its current level of £23.3m.
The budget cut follows a £34m underspend last year as the FOS also received nearly £30m more than expected in case fees.
In 2013/14 the FOS expected to collect £286m but is now predicting £314m. Next year it plans to collect £252m.
For 2013/14 the FOS set a budget to spend £267m but is now expecting to spend just £233m, increasing to £260m next year.
The FOS is expecting to answer 1.8 million enquiries next year and deal with 64,000 bank complaints, 32,000 insurance cases and 150,000 new PPI cases.
The FOS has a backlog of PPI cases but aims to reduce the overall stock to under 270,000 by resolving a record 320,000 cases next year.
Interim chief executive and chief ombudsman Tony Boorman says: “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 cooperation of businesses, before we will be able to draw a line under the PPI saga.”
Evolve Financial Planning director Jason Witcombe says: “Thi is welcome news for advisers. A 20 per cent drop is not to be sniffed at.”
|Insurance (not PPI)||33,172||33,000||32,000|
|Investments and pensions||19,834||16,000||16,000|