The consultation closes on 31 January and its confirmed plans and budget will be published 31 March.
The FOS said there was a range of 157,000 to 220,000 complaints it expected to receive, which was based on the 2022 and 2023 volumes received and “potential impact of novel issues or trends” like the cost of living.
Within this projection, around 127,300 complaints in 2023 and 2024 are expected to relate to banking and credit. This compares to 109,386 complaints received in 2021 and 2022 and 102,800 forecast for 2022 and 2023.
The increase was attributed to several factors including a rise in disputed transaction complaints, increasing volumes and sophistication of fraud and scams.
Another factor was the growth in “irresponsible and unaffordable lending complaints” due to rising interest rates and product portfolio changes on mortgages.
The FOS predicted 38,050 complaints in insurance, 17,300 in investment and pension and 450 other complaints.
It added that it planned to resolve 196,000 complaints in 2023 and 2024, which is both complaints received and unresolved complaints from previous years.
Within that, banking and credit consists of 136,1000, insurance makes up 41,150, investment and pensions are set at 18,300 and other is 450.
FOS projects £240m total income and freezes certain levy and case fees
The FOS said it anticipated its total projected income to be £240m, which is down from this year’s forecast income of £252m.
The body added that it would freeze the compulsory jurisdiction levy at £106m and case fees at £750.
Voluntary jurisdiction levies would be cut to £600,000, compared to £700,000 this year.
It proposed reducing the time limit for case fee disputes from two years to one year from the date of invoice, which would apply to case fees involved after 1 April next year.
The FOS said this would “enable greater predictability for our service and respondent businesses”.
Abby Thomas, FOS’ chief executive and chief ombudsman, said: “When consulting on our plans and budget, it is always difficult to predict what may come to us, and the current climate in which we operate intensifies this challenge. We welcome feedback from stakeholders on our complaint forecasts.”
She added that over recent years, it had generally run a deficient and needed to change its funding model, noting that it was already making changes to “drive cost efficiencies” which would help recover costs and make it more financially sustainable.
However, Thomas said it recognised the cost pressures on businesses and proposed to freeze its levy and case fees, which it would achieve by “offsetting inflationary pressures with cost and efficiency savings”.
She added that it expected its cost base to be lower at £231m for 2023 and 2024, compared to £238m forecast for 2022 and 2023. This leads to an estimated cost per case of £1,176.
No increase in complaints due to cost of living yet
The FOS said it had not yet seen a significant increase in complaints from the rising cost of living.
It said it was aware that customers were “more likely to complain during times of financial uncertainty”.
The FOS said frauds and scams could exacerbate this and during such difficult times customers and businesses are “less tolerant of loss”, which could prolong the resolution process.
It is already working with stakeholders, especially banks and insurance companies, to understand their complaints forecasts.
The FOS said: “We anticipate a lag in increased volumes, as there is a delay between when an issue or dispute first arises and when a complaint is referred to our service.
“As part of this consultation, we would welcome any additional views on the likely causes and impact of the rising cost of living.”
The FOS also noted that there was concern amongst industry stakeholders that Consumer Duty could lead to a rise in complaints, noting that it would continue to engage with firms and the FCA on how new regulation could impact complaints and its approach.
It added that the Financial Services and Markets Bill, which was making its way through Parliament, could “directly impact our service and the way we work and interact with the wider regulatory framework”.
“It might also impact us indirectly through other changes that will affect the obligations of financial businesses and the FCA.”
