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executive summary

This consultation paper sets out:

  • how we are dealing with the current demand on our service - and the operational and financial implications for the current year (2010/2011);
  • our plans for the future, as we look ahead to 2011/2012;
  • the expected demands on our service in 2011/2012; and
  • the operational and financial implications for 2011/2012.

The Financial Ombudsman Service continues to see significant growth in its caseload - with a shift towards harder-fought cases and a further substantial rise in the volume of payment protection insurance (PPI) disputes.

Chapter 2 of this document gives an overview of the current financial year, outlining how the different types of complaints we see (what we call our "case mix") have changed over the last year. It also explains how trends we are currently seeing may serve as indicators for our future workload.

Chapter 2 also explains how dealing with the unexpected additional volume of PPI cases has had a significant financial impact, as well as an operational impact on our service over the past year. This is likely to result in our financial reserves reducing significantly by the end of the current financial year (2010/2011).

The ombudsman service has ambitious plans for the future, to ensure we continue to develop our levels of service in line with the expectations of our users and stakeholders. We believe we have a key role to play in helping the financial services industry improve the way it handles and learns from complaints.

Chapter 3 outlines our plans for the future - on which we welcome feedback. At their heart, these plans focus on our being a trusted, fair and high-quality service, open to everyone.

This consultation paper outlines the achievements we have already made this year. It sets out how we plan to commit to the professional development of our staff, enhance our knowledge-management systems, and develop our capability to better share our insight and information with all our stakeholders - including the financial services industry, consumer groups and regulators.

We have put substantial management focus on increasing our efficiency and reducing our costs.

As a result of our efficiency and cost-reduction drives throughout the year, we are now absorbing most of the additional case-handling costs that have come about because of the shift towards more complex and harder-fought cases.

Apart from any significant cost-implications arising out of the challenging approach some financial businesses are now taking to PPI cases, we expect to end the 2010/2011 financial year with a broadly balanced month-on-month budget.

As well as describing what we have already achieved this year, this document outlines how we plan to modernise our infrastructure - to help improve our efficiency and reduce the overall costs for users of "doing business" with us.

We expect the demands on our service to continue to be challenging.

Chapter 4 of this document explains the continuing uncertainty we expect to see - in relation both to the volumes of cases that will be referred to us and to the types of issues and products those cases will involve. We also expect continuing uncertainty in relation to the impact of challenges to our handling of PPI cases.

Chapter 5 gives more detail about our financial plans for 2011/2012. These plans are based on our aim to freeze - for the second year running - the amount of the case fee and the total underlying levy.

However, the degree of uncertainty and complexity we face in terms of case volumes and "case mix" means we need to review our position on our financial reserves in relation to our compulsory jurisdiction (which covers 97.5% of our workload). Chapter 5 sets out further details of the issues involved and the range of options we are considering.

We are keen to hear from all our stakeholders on:

  • Our overall aims - and the plans we have outlined for the coming year (2011/2012) - particularly in terms of priorities for developing our service.
  • What volumes of new cases stakeholders expect us to receive - and whether the range in numbers we have forecast seems reasonable.
  • Whether stakeholders believe that volumes of complaints about PPI sales will rise or fall - and by what level.
  • Our proposals to freeze the levy and case fee (other than for any increase in our reserves) - and what the case fee and levy balance should be, going forward.
  • What stakeholders believe our position on financial reserves should be - and how this should be funded.

We welcome your feedback on our plans and budget for 2011/2012. Your views and comments on this consultation paper will help us to finalise the budget we put to the Financial Services Authority (FSA) - for its approval in March 2011.

Please send responses to us by Monday 21 February 2011.