Ombudsman gears up to receive 210,000 complaints

COMPLAINTS

The financial ombudsman service (FOS) plans to gear up to resolve a record 210,000 complaints (a 27% increase) in the number of disputes in the 2010/11 financial years from consumers unhappy with their treatment by financial firms. This compares with the 165,000 consumer complaints that the ombudsman expects to resolve in the current financial year – itself a 44% increase on the previous year.

These figures are contained in its proposed budget for next financial year (2010/11).

This reflects continued higher levels of complaints about payment protection insurance (PPI) than originally anticipated (42,700 PPI complaints now forecast for 2009/10).

Other areas where growth in complaint numbers is expected in 2010/11 are banking (forecast to increase by 16% to 85,000 cases) and consumer credit (forecast to increase by 55% to 10,200 cases).

This continued growth in the ombudsman’s workload will involve an increase in operating costs from £96.6m (forecast for 2009/10) to £113.5m (in 2010/11). This includes the cost of 300 additional casework staff needed to help resolve the expected 210,000 complaints.

The ombudsman service’s unit cost (its average cost of handling a case, taking all overheads into account) is forecast at £587 for the current year (2009/10) and is expected to fall by 8% to £540 in 2010/11.

This means that the total levy to be paid by the financial services industry in 2010/11 – raising 20% of the ombudsman service’s funding – can be frozen at the amount levied in 2009/10. And the case fee, paid by those financial firms that have four or more disputes referred to the ombudsman service during the year, and meeting the other 80% of the ombudsman service’s funding requirement, will also be held down at the previous year’s rate of £500.