The Financial Ombudsman Service has proposed to reduce its case fee from £750 to £650 as it looks to further improve the time it takes to resolve cases.
In its 2024/25 Plans and Budget consultation paper, published today (December 6), the Fos said it has managed to reduce the average time it takes to resolve a case from 4.8 months in 2022/23 to 3.2 months in the first half of this year.
It has also improved the percentage of cases meeting its quality assessment from 9 per cent in 2022/23 to 94 per cent.
In the document, the Fos set out plans to build on these improvements and reduce the cost of its service to industry in 2024/25.
It proposes to reduce the case fee by £100 per case to £650 and reduce its compulsory and voluntary jurisdiction levies on businesses.
This results in an effective £60mn reduction in case fee and levy costs to businesses, once inflation and increases in the number of cases resolved are taken into consideration.
Abby Thomas, chief executive and chief ombudsman of the Fos, said: “The Fos has delivered significant improvements in the service we offer, getting customers decisions more quickly while maintaining the quality of our work.
“We will be even more ambitious next year, with plans to resolve complaints faster, while also reducing the cost of our service to businesses.”
It proposed reducing the compulsory jurisdiction (CJ) levy from £106mn to £70m, which is below its 2020/21 level.
The Fos is reducing the voluntary jurisdiction levy (VJ) from £600,000 to £500,000.
This comes as last year, the Fos froze its levy at £106mn, saying it recognised the pressures on businesses.
At the time, it reduced the VJ from £700,000 to £600,000 but kept case fees flat at £750.
Thomas said: “Our plans for the year ahead will help ensure that the customer is at the heart of everything we do.
“We want every person who engages with our service to clearly understand the outcome of their case.
“Now more than ever it’s crucial that businesses work with us to improve all customers’ experiences of financial services.”
The Fos anticipates the total projected income will be £191mn for 2024/25, based on the proposed level of resolved cases.
This is a £51mn reported reduction against the 2023/24 latest forecast income of £242mn, though is an effective £60mn reduction when inflation and resolution volume increases are taken into consideration.
It said: “This provides significantly greater value for money by reducing the average income per case to £936 in the 2024/25 budget, from £1,199 in the 2023/24 budget (and £1,230 in the latest forecast for 2023/24).
“It also maintains our ‘polluter pays’ principle, with a skew of total funding received (63 per cent of the total) being from case fees.”
The Fos said the stated intention in previous plans and budget documentation, is for the case fee income to cover marginal casework operating costs and for the CJ and VJ levies to cover overhead operating costs.
“We have continued to apply this principle to help guide funding levels, with historic pricing also used as reference,” it said.
