Broker News: FOS releases its Plans and Budget for 2021/22

At the end of March, the Financial Ombudsman Service (FOS) published their plans and budget for the next 12 months and onwards. Today we will look at what this means for the regulatory body and us as insurance providers.

As you can imagine, the last 12 to 18 months has had a big impact on complaints received through the insurance industry, a lot of consumers and businesses have depended on insurance cover that didn’t exist on their insurance policies and as you can imagine this has had a bearing on the ombudsman. This plan and budget, however, was actually consulted on in December 2019 to January 2020, so therefore the real impact COVID has had on the insurance industries complaints is yet to be clear, but it is predicted to be around another 170,000 new cases in the year ahead.

The FOS’ strategic priorities for this period are to proactively engage with stakeholders to assist in the prevention of complaints, enhancing its service by bringing down wait times and improve diversity and promote sustainability by looking at new and approved methods to improve internally and therefore become more efficient. All these points are detailed thoroughly within the report.

The budget the FOS has set themselves for the year ahead is £260 million, which is an increase in the previous year. The largest cost with just over 50% of the budget, is staff and as such and in line with FOS’ strategic priorities, they are looking to lower that aspect of their budget, with an expected reduction in staffing over the next 12 months.

To support this budget increase, there is a compulsory jurisdiction levy increase of £12 million to £96 million, together with a case fee increase of £100 to £750. This will have a knock-on effect for all financial services that fund the FOS. The FCA has already released their own Amendments to the Fees manual, with increases apparent.