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corporate plan & budget for 2007/08

12 January 2007

The Financial Ombudsman Service today publishes for consultation its budget for the next financial year (2007/08) - together with its corporate plan for the next three years.

The budget - which includes statistics on workload, financial resources and staffing - plans for an expected decline in the number of new mortgage endowment cases received by the ombudsman service. By the end of the current financial year (2006/07), it expects to have received 60,000 new mortgage endowment cases (compared with 70,000 in 2005/06) with a further 32,000 cases expected in 2007/08.

This means that the ombudsman service will have dealt with a third of a million mortgage endowment disputes and three million general enquiries.

While the number of new mortgage endowment cases is expected to decrease - in line with the longer term workload projections - complaints in some other areas are expected to increase.

Budgeted operating costs for 2006/07 of £59 million are planned to fall to £57 million in 2007/08. The unit cost for the current year (2006/07) is forecast at £477 and estimated to rise to £535 in 2007/08 - as the economies of scale in dealing with the large volumes of mortgage endowment cases fall away. This means that the figure remains significantly lower than the unit cost of £753 in 2000/01, when the previous ombudsman schemes came together to form the Financial Ombudsman Service.

It is proposed that the case fee should be increased for the first time - from £360 to £400 - and that the case fee will only be charged for the third (and any subsequent) complaint. Discussions are currently ongoing with the financial services industry and other stakeholders about the viability of increasing the number of free cases, as part of the review of the funding structure of the ombudsman service.

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