FOS issues discussion paper on future funding model

On 14 June 2022, the FOS published a discussion paper on possible changes to its future funding model..

This follows the FOS’s commitment in their action plan to change and improve the organisation to deliver a better service for the customers. The FOS is looking for views or feedback from financial services organisations, trade bodies, consumer groups and other stakeholders to help with proposals to change the funding model to ensure it is sustainable and more transparent for the future.

FOS suggests it has a couple of options:

  • setting the Compulsory Jurisdiction levy to recover its fixed overheads, as opposed to the current practice of covering a particular proportion of FOS’ income;
  • charging a fixed fee to all Voluntary Jurisdiction participants rather than an amount based on the size of their business and the industry block the business is in;
  • looking at changes to the case fee which has a proportionate administrative impact but better reflects the costs of dealing with different types of complaints – alternatively, it could look at keeping the fixed fee model but increasing the amount. The differentiated case fee option could take account of the stage the case reaches, so cases become more expensive the further they progress through the FOS process;
  • longer into the future, potentially charging professional representatives for bringing cases, and introducing differentiated fees based on case complexity. Other suggestions include giving discounts for cases received in batches and introducing supplementary fees for uncooperative firms.

FOS has already decided not to take forward the following, but seeks views on whether it has made the right decision:

  • introducing a tiered case fee based on volume of cases and firm size, so that firms that bring more cases get charged higher fees;
  • removing the “free cases” allowance from non-group firms;
  • charging a higher fee when FOS finds in favour of the consumer; and
  • requiring a complainant to contribute to FOS’ costs where their behaviour was unreasonable or caused a delay.

The discussion paper is open for responses until 5 August 2022 and a feedback statement will be published in October 2022.

FIN. Team