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.
At the time the Financial Ombudsman Service was set up, parliament 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.
the levy
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 – starting at the time a business applies for its standard consumer-credit licence. Currently, each OFT-regulated business pays £150 for a 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 brings.
And the ombudsman service's funding covers much more than our work settling cases. We carry out a wide range of complaints-prevention work, aimed at helping to stop problems from turning into full-blown disputes. For example:
- we run our technical advice desk for questions about the ombudsman's approach and procedures;
- we publish a range of publications including our regular newsletter, ombudsman news, and our guides for businesses;
- we carry out an extensive outreach programme including seminars, training days and other events.
the case fee
When we handle a complaint that becomes "chargeable" under our rules, the business concerned has to pay an individual case fee. However, we do not charge a business for the first three cases we deal with during the year. For the fourth and each subsequent complaint, we charge a case fee of £500.
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: