corporate plan & 2006/07 budget - introduction to corporate plan

The work of the Financial Ombudsman Service has grown at an unprecedented rate since we were established by law as a unified service for resolving disputes between consumers and financial firms.

In 1999/2000, just before our predecessor complaints-handling schemes were brought together to form the Financial Ombudsman Service, these schemes handled around 25,000 cases in total - at an average cost per case of around £750.

In 2004/05, only five years on, the Financial Ombudsman Service handled over 110,000 cases - at an average cost per case of under £500.

To cope with the increasing workload our staff has grown from about 350 to about 1,000, which makes us by far the largest ombudsman scheme worldwide.

We have coped well with this massive growth. This is thanks to the solid foundations that we and the Financial Services Authority (FSA) established at the outset - in consultation with our stakeholders - as well as to our continuing flexibility of approach, which has enabled us to adapt to changing circumstances.

Our overriding priority has been coping with this rapid growth without compromising the quality of our work. But there is now a realistic expectation that our workload will begin to plateau.

Future increases in some areas (including a wider jurisdiction in consumer credit) are likely to be balanced by future reductions in mortgage endowment complaints - currently our largest area of work.

This should allow us to continue improving our standard of service to consumers and firms. It should also enable us to review (and, where appropriate, redesign) the approaches and processes we use in our key roles of:

• resolving complaints - in a way that is impartial, fair, accessible, timely, informal, efficient and free to consumers - and awarding fair redress where appropriate;
• encouraging the resolution of complaints before they reach us, by providing clear information about our approach; and
• encouraging the elimination of the sources of financial complaints, by providing clear information about the lessons to be learned from our work.

Our key roles involve us in a number of important relationships, in addition to our relationship with those who use our services. These include:

• (as part of the statutory arrangements designed to underpin confidence in financial services) - with HM Treasury and the Financial Services Authority;
• (as a future part of the statutory arrangements designed to underpin confidence in consumer credit) - with the Department of Trade and Industry (DTI) and the Office of Fair Trading (OFT);
• (as an alternative to the courts for resolving disputes) - with the Department of Constitutional Affairs and the wider arrangements for the administration of justice; and
• (as a founder member of the financial redress network [FIN-NET] designed to increase confidence in the European single market in financial services) - with the European Commission.

We are also a key member of the British and Irish Ombudsman Association, which validates and represents public and private sector ombudsman schemes in the UK and Ireland.

In fulfilling our roles, we must take account of many constraints and challenges. Chapter 2 of this document - a demand-led service - explains the factors that can cause our workload to rise and fall, in ways that can be difficult to predict. Chapter 3 - dealing with the demand - refers to associated staffing, process, systems, resources, regulatory and political issues.

Chapter 4 - foundations for the future - provides an overview of our three-year agenda to build foundations for the future. Key items include:

• resolving the current flood of mortgage endowment cases;
• enhancing the efficiency and effectiveness of our casework process;
• demonstrating enhanced clarity and quality in decision-making;
• increasing openness in relation to our work;
• reviewing how our costs are apportioned among financial firms;
• improving two-way dialogue with our stakeholders; and
• enhancing our stakeholders' confidence in the essential role we fulfil.

In line with our commitment to openness, in 2004 we commissioned an independent external review of the Financial Ombudsman Service. This concluded that "the Financial Ombudsman Service is a thoughtful, well-managed organisation that is doing a good job under difficult circumstances".

We propose to commission further independent external reviews every three years, with the next due in 2007.