| Contents |
|
chapter
two
‘we have introduced our new business process and supporting case-handling
system’
| introduction |
| 2.1
|
The
purpose of this document is to report on the performance of the Financial
Ombudsman Service during 2001/02 and to consult on costs
and funding for the year to March 2003. The Financial Services and
Markets Act came into force in December 2001 and this will be the
first year that we will recover our costs directly from firms by way
of a general levy and case fees. The arrangements for the funding
of the Financial Ombudsman Service were consulted on in consultation
papers CP33
and 74 and finalised in the Policy Document, Dispute Resolution: the
Complaints Sourcebook. |
| 2.2
|
This
document also consults on the rule to apply the relevant funding rules
in the FSA Handbook, Module DISP Chapter 5, to the funding of the
Voluntary Jurisdiction, from April 2002. This will be included in
the Standard Terms (FSA Handbook, Module DISP, Chapter 4). |
| 2.3
|
The
focus of this year has been preparation for ‘N2’, the date
when we assumed our full responsibilities under the Financial Services
and Markets Act. This has included the introduction of a new business
process and case- handling system, finalising new eligibility, process
and funding rules, and harmonising ombudsman policy. We have also
had to react to the high level of mortgage endowment complaints and
to maintain quality targets in call handling and processing. |
| |
|
| key
points of the current year 2001/02 |
| 2.4
|
A summary
of the key points of the current year – 2001/02 – is as
follows: |
| |
a)
new complaints
There are indications that the level of new complaints
is finally slowing. Overall, we are still forecasting an increase
of 21% in new complaints in 2001/02 compared with the previous year,
largely due to mortgage endowment complaints. The number of new
complaints overall is still increasing, but the last few months
have seen a perceptible slow down in the rate of increase, which
is welcome news.
b)
case closures
During the year, we have introduced our new business
process and supporting case-handling system. Developing a new system
poses a significant risk for any organisation but despite the inevitable
disruption, we still expect to achieve our 2001/02 case closure
forecast of 38,500.
c)
unit cost
In our plan and budget for 2001/02, we forecast a fall in the
unit cost from £764 to £688. In cash terms, this was
a decrease of
£76 (allowing for inflation, it was a decrease of around £100).
At present, we expect to meet the target of £688.
|
| 2.5
|
As
we look towards 2002/03, our main area of uncertainty is the level
of new complaints. At present, we have differing indicators as to
the future trend. As mentioned above, there are indications of a slowdown
in the level of new complaints reaching us, but several other factors
– discussed in Chapter 5 – suggest that this might not be
a long-term trend. |
| |
|
| key
points of the budget year 2002/03 |
| 2.6
|
Key
points for the budget year 2002/03 are as follows: |
| |
a)
new complaints
Given the uncertainty over the level of new
complaints, we have assumed that there will be no significant change
in the number of new complaints – so the number of new cases
is expected to be 37,500. But we have also tested two alternative
scenarios: a 10% increase and a 10% fall in new cases.
b)
productivity
Our assumption for the base case of ‘no growth’ is that
we will continue to improve productivity. Overall, we aim to increase
productivity by 25% in the three years from 2000/01 to 2002/03.
This will result in case closures for 2002/03 rising to 40,000.
c)
service quality
Following the introduction of our new business
process and introduction of the new case-handling system –
and the changes associated with N2 – it is important that we
introduce formal internal quality control benchmarks from the beginning
of the next financial year. These will include quality measurements
for both decisions and process and will enable us to monitor the
expected improvements in the timeliness and quality of our casework.
d)
budget and unit cost
The result of these assumptions is a total budget
for 2002/03 of £28.2m, an increase of 2.2% over the current
year. The forecast unit cost remains in line with this year –
in absolute terms – at £688 (ie £27.5m costs before
interest, divided by the forecast 40,000 case closures). This represents
a fall, allowing for inflation, of £20 after absorbing the
improved timeliness and service efficiency standards noted above,
staff salary increases, and a higher depreciation charge.
|
| |
|
| conclusion |
| 2.7
|
We welcome
any comments on the different aspects of the plan, its assumptions,
the level of the case fee and the tariff for the Voluntary Jurisdiction.
We also welcome any comments on the proposed additional rule in the
Standard Terms for funding the Voluntary Jurisdiction. Any comments
on the general levy tariff rates and establishment levy should be
made to the FSA, as these matters form part of the
FSA’s consultation document, CP119.
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