Ombudsman readies itself for increase in pension and investment claims

In its strategic plan and budget, published on Wednesday (8 April), the ombudsman said it expected a 12% increase in investment and pension-related cases over the coming year, up to 12,500 cases from 11,200 last financial year.

The FOS also expected to see a rise in cases relating to claims management companies, up 8% on the last financial year from 1,200 to 1,300.

Casework in general, however, was expected to be lower for 2020/21. This was largely due to a reduction of a third in claims relating to payment protection insurance, though claims projections relating to general casework also fell by 4%.

With that said, the document contained a caveat related to the coronavirus that acknowledged the budget was put together and consulted on before the widescale outbreak of Covid-19.

The FOS expects to operate on a cost base of £314.5m during 2020/21.

Eventual 50:50 funding split

Last week the FOS revealed it had decided not to press ahead with plans to change the funding of how the FOS is funded in light of the financial impact of the coronavirus, however in Wednesday's budget it maintained it has the intention of going ahead with the changes at a later date, despite criticism.

In 2019 the FOS began consulting on changes that would see the industry as a whole pay more towards the levy, while those with complaints against them would pay proportionately less. 

At the time, the FOS proposed a 50:50 split between the industry and those with complaints against them. The move was met with criticism from the likes of PIMFA, which suggested it would penalise those with low levels of complaints. The FOS also consulted on a 60:40 split, with the ‘polluters' paying slightly more.

In light of the financial strain placed on firms because of the coronavirus, however, the ombudsman changed tact and decided that, from its new financial year, 70% of the levy would be paid for by those with complaints lodged against them, while 30% would be funded by the industry, representing a smaller increase than originally planned for the wider industry.  

In the budget today the FOS said in the "longer term" it aimed to reach at 50:50 balance between case fees and levy.

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