The Financial Ombudsman Service has proposed changes to its funding model to more accurately reflect the cost of individual cases.

The Ombudsman has proposed that the Compulsory Jurisdiction levy will cover only fixed overheads and the Voluntary Jurisdiction levy will become a fixed fee.

The current case fee is set at £750 for all cases.

However, the Ombudsman has proposed introducing differentiated case fees, allowing the Ombudsman to recover the costs of dealing with more complex cases while keeping the fee low for simpler cases.

The Ombudsman has asked financial services firms, trade bodies, and consumer groups to provide feedback on the future funding model before 5 August.

It will publish a feedback statement in October and use the feedback for its annual budget consultation for 2023/24.

Nausicaa Delfas, interim chief executive and chief ombudsman of the FOS, said: “As part of our commitment to change and improve to deliver a better service for our customers, we are inviting views on proposals to change our funding model. 

“This is to ensure that the Financial Ombudsman Service’s funding is sustainable for the future, is more transparent in its management of fixed costs, and more closely reflects the actual costs of resolving over 150,000 diverse complaints each year.”

The FOS was set up by Parliament in 2000 to resolve individual complaints between financial services firms and their customers.

The Ombudsman launched an action plan to improve its services and operational efficiency in December last year. The funding model discussion paper on the future funding model is part of the commitment to consider revisions of its funding set out in the action plan.

PIMFA, the wealth management profession body, has called for its members to feedback on the proposed funding changes and said that the changes could lead to lower fees for any members with simpler cases going to the Ombudsman.

In its weekly news bulletin, the professional body said: “For discussion are options for updating the current case fee structure. The current case fee is set at £750 which does not take into account the cost of the issue at hand. The FOS are proposing introducing differentiated case fees which would more easily allow them to recover the costs of dealing with specific cases. It follows logically that simpler cases will likely carry a lower cost than more complex cases.”