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FOS raises case fee but freezes levies to help ease cost burden

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  • 08/04/2020
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The Financial Ombudsman Service (FOS) is raising case fees but freezing minimum levies at their 2019/20 levels to try to help offset financial pressures on firms during the Covid-19 crisis.

 

In 2020/21 the ombudsman is raising the case fee to £650 for cases closed after 1 April 2020.

It’s the first time the fee has been increased from its current level of £550 since 2013.

Around 70 per cent of the FOS funding is now set to come from case fees, with 30 per cent coming from its levy.

The ombudsman had initially proposed a 60:40 split, as it tried to reach 50:50 in the future.

Businesses outside the group account fee won’t be charged for the first 25 cases, as the FOS scraps plans to reduce this number to 10. Groups in the account fee won’t be charged for the first 50 cases.

The FOS said it will run on an anticipated operating income of £261.3m.

However, it will use £25.4m of its reserves, more than originally proposed to cover the cost of changes.

In plans published today, the FOS said: “In response to the Covid‑19 crisis, we’ve made adjustments to our proposals, with the specific aim of reducing our costs to firms at this unprecedented time.”

It comes as the FOS said it has already received a number of enquiries and complaints relating to the coronavirus, including concerns around lenders’ treatment of customers unable to pay mortgages and other debts.

Caroline Wayman, chief ombudsman and chief executive of the FOS said: “It goes without saying that Covid‑19 will further amplify both the uncertainty and potential complexity of our casework.

“We’ve put our energy into ensuring we’re playing our part in insulating businesses against the shock of Covid‑19.

“This has meant adjusting our proposals for funding our service this year – while still ensuring our finances allow us to provide the effective service people need and expect from us, especially given the increased potential for financial hardship and vulnerability among UK consumers and business alike.

“The steps we’ve taken are a combination of targeted interventions to protect smaller firms, and broader steps which will benefit other firms that contribute to our funding. We’ll absorb the cost of these changes by using more of our reserves than originally planned.”

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