This section answers a number of frequently-asked questions (FAQs) about:
how is the ombudsman service paid for?
The ombudsman service is funded by a combination of levies and case fees – which businesses we cover have to pay by law.
At the time we were set up, parliament agreed that access to a free, independent dispute-resolution service was essential to underpinning public confidence in financial services.
So it was decided that the businesses we cover - not consumers - should meet the costs of resolving complaints brought to us.
All businesses covered by the ombudsman service pay a levy to contribute to our costs.
The FCA 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.
The levy is payable by the businesses we cover – whether or not we’ve received any complaints about them. This is because all businesses benefit from the increased consumer confidence that having an ombudsman brings.
And the our funding covers much more than our work sorting out complaints – it also pays for our complaint-prevention work. By working together with our customers, we,aim to stop problems from turning into full-blown disputes. For example:
When we handle a complaint that becomes "chargeable" under our rules, the business has to pay a case fee. However, we don’t charge a business for the first 25 cases involving them with during the year. For the 26th and each subsequent complaint, we charge a case fee of £550.
From April 2012 to April 2014, we also charged a supplementary case fee of £350 for the 26th (and each subsequent) payment protection insurance (PPI) mis-selling case.
From April 2013 we introduced a group account charging arrangement for the largest financial services groups. Around three-quarters of our workload is now paid for on this more financially stable basis - by the businesses whose customers use us most.
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: