information for businesses covered by the ombudsman service
This section answers a number of frequently-asked questions (FAQs) about:
our funding
how we are funded
how is the ombudsman service paid for?
We are funded by levies and case fees which businesses we cover have to pay by law.
In parliament and in wider public consultation at the time the Financial Ombudsman Service was set up, it was agreed that free consumer access to an independent dispute-resolution service was essential, to help underpin public confidence in financial services. So it was decided that the businesses we cover – not consumers – should meet the costs of resolving disputes brought to the ombudsman.
All businesses covered by the ombudsman service pay a levy, to contribute to our costs.
For businesses regulated by the Financial Services Authority (FSA) the FSA collects the levy annually as part of their regulatory fees. Currently the levy ranges from around £100 a year for a small firm of financial advisers to over £300,000 for a high-street bank or major insurance company.
For businesses regulated by the Office of Fair Trading (OFT) the OFT collects the levy every five years at the same time that they apply for their standard consumer-credit licence and after that, every five years. Currently, the amount each OFT-regulated business pays is £150 for each five-year period.
The levy is payable even if a business has had no complaints referred to the ombudsman service during the relevant period. This is because all businesses benefit from the increased consumer confidence that the ombudsman service brings – and the ombudsman service's funding covers much more than closing cases. We carry out a lot of complaints prevention work aimed at helping to prevent problems from turning into full-blown disputes. For example, we operate the technical advice desk and we publish a regular newsletter ombudsman news and an extensive series of guides for businesses.
When we handle a complaint that becomes "chargeable" under our rules, the business concerned also has to pay an individual case fee. In 2008/09 we will not charge a business for the first three cases we deal with each year. For the fourth and each subsequent complaint closed against it in that financial year, a case fee for £450 will be charged.
We send out invoices for case fees at the end of the month in which complaints are closed.
In January each year we consult publicly on our proposed budget for the financial year ahead. This includes consultation on the amount we plan to raise through the levy, as well as on the proposed level of our case fee.
For more details see our special factsheet: