FCA confirms FOS budget for 2020/21

On 1 April 2020, the Financial Ombudsman Service (FOS) published a press release confirming that the FCA had approved the FOS’ 2020/21 budget

02 April 2020

This article was written by Natalie Lim.

The press release stated that the FOS is committed to playing its part in supporting UK consumers and businesses through the COVID-19 crisis. Recognising the unprecedented impact of COVID-19 on firms, the FOS has revised its funding arrangements for 2020/21 to include a combination of targeted interventions to benefit smaller firms and broader steps to benefit other firms that contribute to its funding. The FCA fees instrument came into force on the same day.

In summary, in 2020/21:

  • For firms outside the group account fee arrangement, the FOS will maintain the number of 'free' cases at 25. This means nine out of 10 firms will not pay any case fees (set at £650). In line with the FOS’ consultation, the number of free cases will be 50 for each group in the group account fee arrangement.
  • The FOS is asking the FCA to freeze all minimum levies at 2019/20 levels.
  • The FOS will reduce the overall income it takes from its levy, with a case fee to levy income split of around 70:30, compared with the previously consulted 60:40 split.

The FOS will absorb the cost of the above changes, which amount to £25.4 million in total, by reducing its reserves. 

The FOS has stated that it will publish its wider funding plans in the week commencing 6 April 2020. This will include an explanation of the differences between its final and consultation budgets, as well as a summary of the feedback received to its consultation.

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