The Financial Ombudsman Service will keep costs lower for businesses and further improve value for money as it faces continued high demand in the coming year, according to proposals released today.

The dispute resolution service, free for consumers, has published its plans for the next financial year, including plans to freeze all processing fees and levies for finance companies.

This comes at a time of growing demand for this service: so far in 2024/25, the Financial Ombudsman has received more than 190,000 cases covering issues that affect people’s daily lives, including complex frauds and scams, unaffordable loans and car loan agreements.

As a demand-driven organization, there is an element of uncertainty around the volume and types of files it might receive. This is why each year the Financial Ombudsman consults with industry and other interested parties through the plans and budget. Currently, the service is forecasting around 240,000 cases in 2025/26.

Despite the increase in volumes, fees were significantly reduced in last year’s plans and budgets, with application fees dropping to £650 for surveyed businesses, as well as a reduction in mandatory and voluntary jurisdictional levies. The proposal is to keep costs and levies at this level – which, taking into account inflation, represents a saving of £70 million for the industry compared to 2023/24 prices.

At the same time, the Financial Mediator is committed to reducing its cost per file while continuing to improve deadlines and maintain the high quality of its service. Under plans and budgets for 2025/26, the expected cost per case will be reduced to £1,044, compared to an expected cost of £1,082 for 2024/25.

These savings are the result of substantial improvements in new technologies, tools and ways of working – with the introduction of specialist teams, improved analytical capabilities enabling more efficient resourcing and machine learning being used to assign cases more quickly .

Over the past few years, this has resulted in case processing time reduced by more than half, from a median of 6.4 months to resolve a case in 2021/22 to 3.1 months in 2023/ 24. This means real people and businesses can end their disputes more quickly.

Abby Thomas, chief executive and chief ombudsman of the Financial Ombudsman Service, said:

“The decisions made by our vital service have helped tens of thousands of consumers and businesses resolve disputes this year in sometimes very difficult and stressful circumstances.

“Our dedicated expert teams have helped people recover millions of pounds in repairs. I am also pleased that, for the second year in a row, we have been able to offer significant savings to the industry.

“That doesn’t mean there’s nothing more to do. I am keen to continue to modernize our service and the framework in which we work – leveraging technology and the expertise of our people to streamline processes while meeting the high standards of service that consumers and businesses expect. rightly expect.

“I welcome stakeholders’ views on our proposed plans and budget for next year. The financial services sector is experiencing huge change and it is crucial that the Financial Ombudsman Service continues to evolve with this.

The consultation on the 2025/26 plans and budgets comes at a time when the Financial Ombudsman Service and the Financial Conduct Authority (FCA) have launched a joint investigation Call for contributions to gather views on how to adapt the redress system for the future and give businesses the stability they need to invest, innovate and drive sustainable economic growth.

Over the next financial year, the Financial Ombudsman expects it will resolve around 270,000 cases, made up of both new complaints and older disputes. The budget proposals include plans to increase its resources to ensure all cases can progress and be resolved in accordance with its service standards.

The budget also assumes that the Financial Ombudsman will receive £3 million from professional representatives and claims management companies (CMCs) in the next financial year. Plans to introduce fees for cases brought to the service by these professional representatives are currently undergoing the relevant regulatory approval process, so full details and a timetable for implementation will be set out in a published policy statement during the new year.

Consultation on plans and budget for the Financial Ombudsman Service is open until 29 January 2025 and the consultation document is available here.

The call for contributions runs until January 30, 2025 and is available here.