How is the Financial Ombudsman Service funded when Dealing with PPI Claims

PPI Claims FOSIf you have as dispute regarding your PPI claim, once all the procedures have been followed, the case could be referred to the Financial Ombudsman Service (FOS).

Why Do Companies Allow Complaints to go to the FOS?

I have often wondered why if you make a claim against a Bank/Credit Card for mis-sold PPI, why do these Lenders allow it to go as far as having to get the FOS involved?

Well first of all, for the consumer it can be off putting to have to fill out another set of forms, in order for the FOS to look at the case. I suppose that at this stage, some people will decide not to proceed further. Financial Institution wins!

I would like to suggest that the FOS is actually funded by the Financial Institutions to look at each case.

How is the FOS Funded for PPI Claims?

Here is a Freedom of Information Request that shows how the FOS is funded with regards to these cases:

“Dear Financial Ombudsman Service Limited,

I have a complaint against a bank regarding a PPI claim; If I follow all the complaint procedures and my only option is to refer a case to the FOS, how is the FOS funded to deal with this particular case/complaint?”


I have carefully considered your request and am able to provide you with the
following information.
Firstly, it may help if I explain a little about how we are funded. We are funded by an annual levy and case fees from the financial businesses we cover.

When we handle a complaint, that case becomes ‘chargeable’ under our rules. We do not charge for the first 25 cases we deal with from a business that year. However for the 26th and each subsequent case we charge a fee of £550.
Since April 2012 we have 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. However pending approval for our budget for the year 2014/2015 by our board and the board of the FCA, the supplementary case fee will not be charged as of 1 April 2014.  
You can find more information about case fee billing in our annually published Plan and Budget:

I hope that my response addresses your request; however, if you do not consider that we have fully complied with the Freedom of Information Act, there is further information below.       
Yours sincerely
Information Rights Officer”

Is the FOS impartial?

So the first 25 cases are free, after this each subsequent case the financial institution has to pay the FOS £550.

So if I were a Bank why would I want to pay the FOS £550 to look at cases I refuse to payout on? I am sure that with a company such as Lloyds they must submit many thousands of cases to the FOS. Many thousands of cases X £550 is a lot of money to pay out! Unless of course there is a benefit to paying the FOS to look into these cases?

Please do tell me your view in the comment section below.


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