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corporate plan and 2008/09 budget

January 2008

overview of budget

Chapters 5 to 8 report on our performance so far during the financial year 2007/08 and consult on our workload forecasts, proposed expenditure and funding for the financial year 2008/09.

2007/08

In this current financial year, the number of new complaints referred to us is expected to be nearly 29% above the estimate in the budget on which we consulted in January 2007. This arises from a temporary surge in complaints relating to charges for unauthorised overdrafts - partially offset by lower than anticipated numbers of complaints relating to mortgage endowment policies, which have reduced faster than anticipated.

Following this temporary increase in workload, the total number of new complaints is likely to decrease significantly. We froze recruitment in order to reduce staff by natural turnover. However, in order to rebalance future workload and workforce, it was necessary to announce a restructuring of the service (with associated redundancies) in September 2007.

Because of the recruitment freeze, we had fewer adjudicators settling and closing cases than budgeted. And the announcement of the restructuring programme, with the associated statutory consultation process, caused some loss of productivity. Coupled with an increase in the proportion of more complex disputes in some areas, this has led to case closures being nearly 12% below budget.

2008/09

As in previous years, the pattern of new complaints remains uncertain. However, with mortgage endowment complaints tailing-off (as they become time-barred) and complaints about charges for unauthorised bank overdrafts on hold, awaiting the current High Court proceedings, we expect a significant decline in the number of incoming complaints for 2008/09.

As a result of the restructuring of the service, the number of adjudicators and the number of cases settled and closed will be scaled back. Nevertheless, we expect the number of cases closed to exceed the number of new cases, leading to a reduction in our current caseload by the end of 2008/09.

Our expenditure (excluding restructuring costs) is expected to fall by 9% compared with the 2007/08 forecast and by 14% compared with the 2007/08 budget - owing to the lower number of employees - but the unit cost is expected to rise to £584. We have retained the benefit of efficiencies developed over past years. But we will inevitably lose economies of scale as volumes decline, and some fixed costs (such as premises) cannot be reduced immediately.

When we and the FSA consulted about the funding of our compulsory jurisdiction, a majority of respondents favoured increasing the proportion of our funding that is collected through case fees and also increasing the number of 'free' cases. Because of the current volatility in case numbers, we need to move cautiously at present. But we propose to move in the direction favoured by those who responded to the consultation - increasing the case fee to £450, and the number of 'free' cases to three.

image of corporate plan and 2008/09 budget

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