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corporate plan and 2008/09 budget

11 January 2008

The Financial Ombudsman Service today publishes for consultation its budget for the next financial year (2008/09) - together with an update on the budget for the current year (2007/08) and the corporate plan for the next three years.

The budget - which covers workload, financial resources and staffing - predicts that a higher than forecast number of new disputes will be received by the end of the current financial year (2007/08). It is now expected that the ombudsman service will have received 103,300 cases by 31 March 2008, rather than the 80,000 cases originally anticipated.

This increase has been driven by the significant number of complaints received about unauthorised overdraft charges. The number of disputes in certain other areas, such as general insurance and credit, are expected to continue to rise.

However, it is forecast that with the continued fall in the number of new mortgage endowment cases, the total number of new complaints received in the next financial year (2008/09) will decrease to 72,000. The ombudsman service plans to be able to resolve the majority of all disputes within three months.

Budgeted costs for 2008/09 total £49.4 million (£57.3 million in 2007/08). The unit cost for the current year (2007/08) is forecast at £571 and is expected to rise to £584 in 2008/09 - as economies of scale in dealing with large volumes of complaints relating to mortgage endowments and unauthorised overdraft charges fall away. This 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) - as a result of structural efficiencies that have been implemented by the service.

It is proposed that the case fee in 2008/09 should be increased - from £400 to £450 - but that the number of "free" cases should also increase from two to three. This means that a case fee will only be charged for the fourth (and any subsequent) complaint - so that 99.5% of businesses covered by the ombudsman service should not pay case fees.

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