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No change to FOS funding model next year

FOS chief executive Caroline Wayman

The Financial Ombudsman Service does not plan on making any changes to the way it is funded in the next financial year.

The FOS published a consultation today about its proposed plans and budget for the 2018/19 financial year.

The consultation says the organisation is aware it will need a funding model that accounts for the “flexible” way it now resolves complaints.

However, because of ongoing challenges, including with payment protection insurance complaints and packaged bank accounts, the FOS does not see that 2018/19 is the right time to make a change.

The paper says: “In light of the complexities we’ve highlighted, it’s clear the need for certainty and stability is particularly important at this point. And because the picture is still unfolding, it’s likely that any changes we did make would need to be reviewed in the not-too-distant future.”

It adds: “So at this stage, we don’t think 2018/2019 is the time to change our funding model. But to ensure we’re ready for when the time is right, we’ll continue to model different options for our funding, and keep talking to our stakeholders as we do so.”

The FOS expects its operating costs to increase by around 14 per cent in 2018/19, which largely relates to extra contract staff to help it deal with PPI.

On investments and pensions complaints in 2017/18, the paper says the number of complaints remains “relatively small”. It says there was a small number of complaints relating to market changes after the Brexit referendum.

The FOS says there has been a significant increase in complaints about annuities in the past few months with many relating to people saying they should have been sold an enhanced annuity.

The FOS says, overall, it has received relatively few complaints about pension freedoms with most of the approximately 1000 complaints related to administration errors, delays or exit fees.

The latest forecast for new complaints about pensions and investments in 2017/18 is 14,000. It is predicting the same number of investment and pension complaints in 2018/19.

The consultation proposes that the FOS will, for the sixth year in a row, continue to charge a case fee of £550 per case with 25 “free cases”.

The FOS will publish its final plans and budget for 2018/19 before the end of the current financial year, after it has been approved by the FCA.

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