The Financial Ombudsman Service (FOS) is considering changing its funding model to incentivise constructive behaviour within the industry and says it has halved its complaints backlog this year.
The proposal forms part of the regulator’s action plan to change and improve the organisation and provide the best service for customers – including speeding up claims adjudication processes.
In shedding further light on funding, the FOS said: “We will consider revisions to the funding model to incentivise constructive behaviour in [the] industry.
“Although case fees and levy contributions have increased in recent years, the underlying funding model has not changed.
“We will be considering this position for budgets in 2022/23 and 2023/24 – and will consult as appropriate,” it added.
The action plan published today followed an independent periodic review commissioned by the FOS board which focused on five key themes:
- A new operating model to meet a changing environment aimed at making it more effective and efficient to resolve cases more quickly;
- Enhancing technology and digital capabilities, to drive productivity and to make it easier and more efficient for customers to choose how they interact with the FOS;
- Boosting engagement with stakeholders and taking a robust and proactive approach to preventing complaints and unfairness arising to ensure that problems are solved together efficiently;
- Developing the current strategy to further enhance the FOS using insights from timely case handling to prevent further harm to consumers;
- Exploring revisions to the FOS’s funding model to ensure a sustainable future.
‘Need to go further and faster’
The FOS noted that the review “supports our view that, even with the changes and innovations we are now making to clear our backlog of cases, we need to go further and faster.”
The regulator added it had adjusted its spending by freeing up funding from a six-month to three-month reserve as a step towards becoming more financially sustainable and it will revisit the planned trajectory for the expenditure of funds realised from the rundown of the reserve holding.
And it will consider the best path to achieve both maximum case clearance and productivity improvements.
Commenting on the action plan, Baroness Zahida Manzoor, chairman of the FOS, said the board commissioned review to get an impartial perspective on current and future challenges.
“As we move forward, we value our strong working relationships with the Financial Conduct Authority (FCA), the wider regulatory family and look forward in partnership to preventing and addressing detriment to our customers. This action plan will help the Financial Ombudsman Service to play its part,” she said.
Nausicaa Delfas, interim CEO and chief ombudsman of the FOS, added: “The Financial Ombudsman Service is at a pivotal point.
“The action plan is our commitment to continue to make the changes we need to resolve customer complaints more quickly.
“We will be changing our operating model, leveraging technology, and ensuring we share our insights to prevent complaints from arising in the first place. This builds on the work we have already done to almost halve our backlog so far this year.
“This review has given us the opportunity to reset and move forward, and we are determined to seize it.”