FOS funding nears crisis point; Levy hike looms

Laura Miller
clock • 1 min read

The FOS must make a final decision on the level of its reserves this month, as firms' continued refusal to pay fees linked to payment protection insurance (PPI) cases look set to exhaust funds and force levies to rise by as much as 25%.

The Ombudsman warned in January the decision among some firms, including large high street banks, not to pay up when receiving an unfavourable ruling over PPI could cripple it "in six weeks". To continue day-to-day operations, the Ombudsman could be forced to pass the cost onto the whole industry - not just PPI sellers - via an emergency interim levy, similar to that issued by the FSCS in January to pay for a series of investment firm failures. Annually, the cost of dealing with soaring PPI claims could send firms' FOS levy for 2011/12 as much as 25% higher, the Ombudsman has said.  ...

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