The FOS is currently funded through a combination of case fees which includes a general levy on firms within its jurisdiction and a levy on voluntary participants.
Voluntary participants currently contribute £700m which is calculated based on business size and which industry the firm operates in.
The FOS has proposed a fixed fee for voluntary participants which it expects to be no more than current fees. This option aims to reduce the administrative cost which results from calculating each firm’s levy.
When the FOS was set up in 2001, its income was split equally between case fees and levies. Over time, the impact of payment protection insurance (PPI) has meant this split has moved to 44:56 levy to case fee.
All financial businesses are required to pay a levy regardless of whether complaints have been lodged against them with the FOS.
The FOS has issued a flat fee structure since its inception, but said many cases cost more than the £750 charged, so it wants to review whether a different model will ensure businesses pay the costs of their complaints.
The consultation paper added: “We also want to understand whether it would incentivise firms to engage with us more constructively.
“Differentiated case fees could allow us to more easily recover the costs of dealing with a case based on how many stages in our casework it needs to go through, or how complex the case is.”
However, it said implications of these proposed changes included extra administrative work and the need for more detailed invoices which may increase fee disputes.
Nausicaa Delfas, interim chief executive and chief ombudsman of the Financial Ombudsman Service, said: “As part of our commitment to change and improve to deliver a better service for our customers, we are today inviting views on proposals to change our funding model.
“This is to ensure that the Financial Ombudsman Service’s funding is sustainable for the future, is more transparent in its management of fixed costs, and more closely reflects the actual costs of resolving over 150,000 diverse complaints each year.”
