Jan 20 – Changes at the FOS

The New Year will bring a consultation on changes to the funding of the Ombudsman service.  It appears that the PPI debacle has masked a savage increase in overheads at the service where the PPI case fees have subsidised a huge cost transformation.  As these cases run off the industry is now being asked to step up.  The review of FSCS funding run during 2016 and 2017 was a great example of FCA, FSCS and industry sharing thinking to deliver a new solution.  It appears unfortunate that FOS has wanted to ask the industry for written views but complete all its thinking behind closed doors.  The FSCS review of its funding was characterised by great open forum debate with the FCA holding the industry coats.

The plan to reduce the number of free cases from 25 to 10 will impact a number of firms and with the move to increase the share paid via the levy, it moves us away from the “polluter paying” to the costs being more widely visited on all.  With the near certainty that the PPI endowment will now run all through 2020, I think that we could defer the model change until financial year 21/22, to give all parties more time to fully understand the operational, cost and funding dynamics.

The industry deserves a more transparent consultation and discussion process than to date.  We need to get under the skin of the numbers we are being given limited sight of.

Robert Sinclair
December 2019.