The Financial Ombudsman Service (FOS) is expecting to receive 4,000 fewer insurance complaints in the 2025-26 year than it originally budgeted for.
However, the ombudsman is still planning to increase its compulsory levy by 23% and case fees by almost 5% despite projecting a continued fall in all financial services complaints next year.
The regulator said this was to pay for its modernisation and reform programmes and in response to inflationary challenges and the body’s lower level of reserves.
Overall, it is expecting to receive 205,000 complaints this financial year, 100,000 fewer than in 2024-25 and expects this fall to continue next year to 188,000.
Its budget for the current year is also trending slightly below expectations at £273m and it expects this to fall again to £260m next year.
As a result of the financial demands it is proposing to increase case fees by 4.6% from £650 to £680 and the compulsory jurisdiction (CJ) levy by 23% from £70m to £86m.
Case fee for professional representatives such as claims management companies (CMCs) will also rise 4% from £250 to £260, with the credit if the case is found in favour of the complainant increasing from £175 to £180.
Fees below 2023 level
“We had held our case fees and levies flat for two years at the significantly reduced 2024/25 levels,” the FOS said.
“However, it is no longer sustainable to continue to hold at these levels as we respond to inflationary challenges, and given our lower level of reserves, the need to manage a greater level of uncertainty and the cost of implementing the biggest reforms to our service since we were created.
“We are therefore consulting on a proposal to increase our income through an increase to the case fee and levy.”
The ombudsman added that its proposed costs for respondent firms still represented a “significant saving” on 2023/24 levels, where the case fee was £750 and the CJ levy was £110m.
“This results in a total 2026/27 budget of an in-year deficit of £10m, a £40m improvement compared to 2025/26, with the year-on-year movement broken down into £23m higher income from price rises, £6m higher income from resolving 10,000 more cases and £11m total net cost reduction,” it continued.
“As changes are implemented over the next couple of years, including from the modernising redress programme, we aim to deliver further operational and cost efficiencies to ensure our income and costs are matched and are at an appropriate level,” it added.
Insurance cases
Specifically on insurance complaints, the FOS is now on course to handle 41,400 insurance-related cases this year, down from the projected 45,600.
The figure is expected to stabilise next year at around 41,800.
The FOS said the slightly lower levels of insurance complaints, were “reflecting the continued tail-off of Covid-related complaints and the work we have done with firms sharing insight on our approach to complaints about motor valuations”.
Health and protection insurance-related complaints remain comparatively small in number for the FOS, but it has been reporting notable increases in these figures over the last two years.