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FOS proposes smaller firms paying more in post-PPI world

  • 03/07/2019
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FOS proposes smaller firms paying more in post-PPI world
The Financial Ombudsman Service (FOS) has proposed changes to its funding model that could see some firms pay more for its services.


The complaints-handling body has published the consultation paper anticipating its future following the final deadline for payment protection insurance (PPI) complaints in August.

The FOS’s case fee income is likely to drop dramatically when the PPI window closes.

The obudsman proposed a model whereby its budget comes 50 per cent from levies and 50 per cent from individual case fees.

The proposal included cutting the number of free cases it handles to 10 for smaller firms, down from 25. The number for group account firms is 50, down from 125. 

The change would result in an additional 288 smaller firms paying for cases. The proportion of smaller companies paying will climb to 18 per cent, up from 10 per cent currently, under the proposal.

The proposed cost of an individual case will remain flat at £550, with the new levy charge decided by the Financial Conduct Authority (FCA) later this year.


More in case fees and levy

“If a business has more than 10 but less than 25 cases they will be paying additional case fees. In terms of the exact amount of the levy, we have to wait for those details to be published later in the year. But it’s certainly possible that some businesses will be paying more in case fees and levy,” said Debbie Enever, FOS head of external relations.

“Generally the picture over the last few years is that smaller businesses were not seeing even inflationary rises in terms of what they were costing to use us and actually they benefited from the increase in number of free cases from 2010.

“I wouldn’t say smaller businesses will end up paying more than their fair share. If anything, it’s getting their proportion up more to an appropriate level.

“The impacts on small businesses are important ones and we would really welcome feedback from stakeholders on what we can do to manage any risks to smaller businesses,” she added.

The deadline for responses is 13 August 2019 by email: consultations@financial‑, or online.

The FOS will put forward its budget requirements for the year beginning 1 April 2020 to the Financial Conduct Authority (FCA) later this year, with the FCA consulting in December about the specific amount of the levy.


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