5 Things You Need to Know About the Financial Ombudsman Service’s New Business Plan
Around this time last month, my colleague Shai Cassidy took you through everything you need to know about the 24/25 FCA Business Plan. Now, their peers at the Financial Ombudsman Service have published their own plans for the next 12 months – and we’re here to give you the 5 takeaway headlines you need to be aware of.
1. The number of complaints keeps on rising…
When consulting on their 24/25 plans back in December of 2023, the Ombudsman forecast that they would receive 181,300 complaints. After considering input from both the industry and consumer groups, the final plan revises that up significantly to 210,000. There are a mix of factors behind that uplift, with the Ombudsman budget citing the ongoing rise in frauds and scams, cost-of-living pressures spurring increased unaffordable lending complaints and media-coverage leading to a rise in complaints about account closures. But one issue looks bigger than any of those –
2. … especially in Motor Finance…
Complaints about Motor Finance Commission have more than doubled from the consultation stage to the final budget, with the Ombudsman’s expectation shooting up from 6,200 to 13,900. That’s a huge increase, and it does not include Discretionary Commission Arrangement complaints that are expected after the FCA’s pause ends. We’ve written about the DCA Situation before [click here for an overview] and this confirms that it’s going to be one of the biggest stories in the Complaints space this year, if not the biggest.
3. … but those complaints should be resolved faster than ever…
In the 22/23 financial year, the Ombudsman’s average timeframe for case resolution was almost five months. By Q4 of 23/24, that had come down to just under 3 months. Utilising a combination of increased headcount and improved efficiency, they aim to resolve 17% more complaints than they did last year. That’s an admirable goal and it will be interesting to see if they can hit that target – and how much more resource they will need to do so.
That surge in complaints won’t just affect the Ombudsman – the industry should think about the potential impact on their internal Complaints teams, whether their firms have the resource and knowledge to handle a surge in the number of complaints and to navigate their subsequent interactions with the Financial Ombudsman Service where those complaints are escalated.
4. … even though the Ombudsman is reducing its fees.
One of the hottest topics at the time of the Consultation, the Ombudsman has followed through on the plan to reduce case fees, with the cost per case dropping from £750 to £650. There’s also a reduction in their other primary funding source, the Compulsory Jurisdiction and Voluntary Jurisdiction levies paid by all FCA regulated businesses that fall under Ombudsman purview. In 23/24, those levies brought in a total of just over £110 million – this year they’ve budgeted for a £40 million reduction.
5. There are no details on possible CMC charges.
The other major conversation surrounding the Consultation last year focussed on CMCs. (See our previous article on this for some background on the CMC Charge situation) The consultation included questions around potentially charging “professional representatives” for lodging complaints with the organisation. The published 24/25 Plans and Budget document does not reveal the outcome of this – the Consultation Feedback section of the document reproduces the relevant questions but simply says that “Feedback on these questions will be included in a separate publication during the first quarter of 2024/25.” The wording of these queries suggests that the Ombudsman wants to strongly discourage firms from passing charges on to the consumers complaining. How successful they are could substantially change the CMC landscape and in term the number of complaints that come to the Ombudsman in the future. But for now, we just don’t know, leaving one of the biggest questions we had going into this Plan unanswered.
It’s looking like a very busy year in the Complaints space, and I would recommend all Financial Services organisations be prepared. Providing experienced, knowledgeable Complaints talent to firms is a core part of our work here at Kind Consultancy, we are able to deliver a Managed Service for volume Complaints projects, as well as smaller numbers on site, hybrid and remotely. To find out more and have a confidential discussion about your organisation’s Complaints needs, get in touch on 0121 643 2100 or selena@kindconsultancy.com
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In Kind news, last week we took a day out to review our success in Q4, strategize and share ideas about what we want to achieve and how over the next 12 months, and celebrate the hard work the whole team put in (see photos here)
And in case you missed it, on Monday for Earth Day our own Catherine Tieley shared some of the ways she’s trying to preserve the environment and live more sustainably this year, at home and in the office – click here to see the video, with some tips you might not have thought of before.
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