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PIMFA condemns FOS 50/50 funding proposal

Adviser trade body PIMFA has joined others to criticise the Financial Ombudsman Service’s proposal to change the split of the costs of its funding between case fees and the levy borne by all firms.

PIMFA has warned the new proposal would see firms that generate fewer complaints subsidise those which account for the majority of complaints.

The ombudsman launched its consultation last month to call for changes to its future funding model after it de-scales operations in September.

FOS calls for levy changes in funding overhaul consultation

At present, 85 per cent of funds are from fees paid by firms for each complaint that is raised and 15 per cent from the all-firms levy.

PIMFA’s  condemnation of the FOS’ 50/50 proposal echoes criticism from other stakeholders.

In its response to the consultation, the Building Societies Association previously suggested the FOS-proposed structure will see firms that generate fewer complaints subsidise firms that account for the majority of complaints.

PIMFA director of regulation Ian Cornwall says: “We strongly disagree that FOS’s levy and case fee income should be re balanced to 50/50 split.

“No financial analysis was provided in the consultation paper explaining how this decision was reached.

“The new proposal is unreasonable, and will penalise firms with a low level of complaints and provides little incentive for firms receiving a high volume of complaints to modify their behaviour and/or improve their complaint handling.

“FOS should rework its proposal so that the costs recovered by means of a levy are as low as possible. Further work is needed to address this issue.”

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  1. Could this be anything to do with uppimng the fees to pay for the thousands of PPI adjudicators that will no longer be needed.

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