This section answers a number of frequently-asked questions (FAQs) about:
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.
All businesses covered by the ombudsman service pay a levy, to contribute to our costs.
For businesses regulated by the Financial Conduct Authority (FCA), 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.
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 £140 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:
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 25 cases we deal with during the year. For the 26th and each subsequent complaint, we charge a case fee of £550.
Since April 2012 we've also charged a supplementary case fee for each payment protection insurance (PPI) mis-selling case – but chargeable only on the 26th (and any subsequent) case during the year.
From April 2013 we introduced a group account fee for the four largest banking groups.
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: