With March 2016 marking the introduction of the Mortgage Credit Directive and end of the transition period for FCA licensing of consumer credit businesses, the Ombudsman said it would request a rise in the regulator’s levy to bring it back in line with its previous level.
The compulsory levy collected by the FCA includes fees for the regulator as well as the Financial Services Compensation Scheme (FSCS) and Money Advice Service (MAS).
In its latest plans and budget report, the Ombudsman revealed it would be forced to review its current fee arrangements, in light of changes to the FCA’s complaints handling rules. The rules will allow businesses to provide a summary response to a complaint within three working days rather than just one day from 30 June 2016.
FOS said it would gather evidence and views concerning the rule amendments with the potential for proposed changes in 2017/18.
In addition, the case fee implemented by the Ombudsman outside of its group fee arrangement will be frozen at £550 meaning 99% of businesses will continue to pay no case fee at all. It added that it would maintain the number of free cases at 25.
Its operating income budget will also be lowered to £223.2m for 2017/17, slightly lower than its latest forecast of £227.2m and broadly in line with its budget for this year.
Since the Ombudsman was established in 2000, the number of new cases it has taken on has risen to half a million, compared to 25,000 in its first year of business. The report said that while the volume of new complaints declined last year, it expects numbers to stabilise around the current level in 2016/17.
Aside from Payment Protection Insurance (PPI), which continues to dominate the Ombudsman’s complaints, banking and credit remained its largest area of work. It noted a significant rise in complaints regarding packaged bank accounts, which totalled 21,348 in 2014/2015.
The Ombudsman budgeted for 90,900 new complaints regarding banking and credit in 2015/16, but expects this to total 99,600 by the end of the year. It has set a budget of 76,000 new banking and credit complaints for 2016/17.