According to the FOS’ plans for the year ahead, there has been a recent surge in complaints, especially in cases from the motor finance commission, which make up around half of its current stock of around 190,000 cases.
The FOS said these cases cannot be resolved as of yet due to “ongoing legal and regulatory action”.
It noted that “exceptional demand strains resources and underlines the need for reform around mass redress events”.
The FOS said it was working closely with HM Treasury and the Financial Conduct Authority (FCA) to carry out a “transformative journey to modern[ise] both its services and the wider redress system”.
The Chancellor Rachel Reeves said in her inaugural speech last year that reform was on the cards for the FOS.
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Measures include improving case-handling efficiency, increasing workforce flexibility, and enhancing the use of digital tools to streamline processes.
The FOS added that it was committed to offering firms “better insight” into complaint trends to help them tackle the “root causes of disputes and reducing the likelihood of cases escalating”.
The result of this transformation will be to “promote early resolution and improve confidence in the wider redress system”.
Jenny Simmonds, interim CEO of the FOS, said: “We never forget that behind each case are customers waiting for an answer. As we respond to the huge levels of demand we saw last year, we are continuing to drive forward our plans to transform and improve our service.
“We are increasing our capacity to resolve cases productively, building flexibility into our workforce to respond to reasonable changes in demand.”
Case fees and select levies to remain frozen, FOS says
The FOS confirmed that it will maintain the “significantly lower costs” for respondent businesses that it brought in last year.
Case fees will stay at £650, and the reduced compulsory and voluntary jurisdiction levies will be maintained.
It reiterated that it had changed the fee model for professional representatives, which came into force on 1 April, which would make it “fairer” but also “encourage professional representatives to submit better-evidenced complaints, considering their merits more diligently before referring them”.
James Dipple-Johnstone, interim chief ombudsman at the FOS, said: “Our decision to maintain current case fee levels and levies for businesses represents a saving of nearly £70m to industry compared to pricing in 2023/24.
“We will continue to share our insight with businesses to help them to better understand why complaints occur so they can resolve them earlier or stop them occurring in the future.”
The maximum amount the FOS can require a business to pay when it upholds a complaint is rising, with the award limits increasing to £445,000 for complaints about acts or omissions that occurred on or after 1 April 2019.
The report stated that the free dispute resolution service anticipated getting 209,000 complaints through the year on a range of financial issues. These include bank accounts, credit cards and insurance.
This is higher than 2022/23 and 2023/24, but a significant drop on the 330,000 cases it predicts it will have received over 2024/25 due to the impact of motor finance commission complaints.
