The Financial Ombudsman Service (FOS) is planning to cut its compulsory levy by which is paid for by all financial services firms to £70m for the 2024/25 financial year.
The figure will be £36m or 34% less than the £106m it required in the current year while claims management companies (CMCs) are likely to face fees when using the service.
The FOS is also intending to cut its case fee from £750 to £650 while also expects to further reduce the time it takes to handle complaints and improve its handling performance.
Overall the regulator anticipates its total income will be £191m for 2024/25, based on its proposed case work, around £51m less than the 2023/24 latest forecast income of £242m.
It said this was an effective £60m reduction when inflation and resolution volume increases were taken into consideration.
This will in part be funded by use of its surplus reserves with £13.7m proposed to fund ongoing transformation and £27.2m to cover operating costs, which will take it down to 5.5 months of reserves by the end of 2024/25.
Fees from CMCs and other legal representatives are also likely to be introduced the service noted.
“We anticipate being given new powers by HM Government, under the Financial Services and Markets Act 2023, to charge a fee to CMCs and relevant legal professionals who represent complainants about financial businesses under our compulsory jurisdiction,” it said.
“This is in addition to the case fee that we charge to respondent firms.”
However, the FOS was clear that it intended to be free to use for individuals submitting their own cases.
Service improvements
The FOS said it had already made “significant strides” to improve the service it offers consumers and businesses – including reducing the average time it takes to resolve a case from 4.8 months in 2022/23 to 3.2 months in the first half of this year.
It added the percentage of cases meeting its quality assessment had also risen from 92% in 2022/23 to 94%.
FOS chief executive and chief ombudsman Abby Thomas (pictured) said: “The Financial Ombudsman Service has delivered significant improvements in the service we offer, getting customers decisions more quickly while maintaining the quality of our work.
“We will be even more ambitious next year, with plans to resolve complaints faster, while also reducing the cost of our service to businesses.
“Our plans for the year ahead will help ensure that the customer is at the heart of everything we do. We want every person who engages with our service to clearly understand the outcome of their case.
“Now more than ever it’s crucial that businesses work with us to improve all customers’ experiences of financial services.”