At the beginning of the year, the FSA outlined four possible options for future funding in a discussion paper, following concerns raised about the fairness, proportionality and sustainability of the present funding arrangements.
In particular, concerns were expressed over the volatility of levies which fund the compensation scheme allowing a disproportionate impact on one or two contribution groups, and the logic of current cost allocation arrangements.
However, despite a significant majority of respondents in favour of a fixed price annual levy for firms of all sizes, including a certain number of case studies, further work is required to analyse how one of these models would operate in various possible scenarios before the FSA is satisfied that it should be adopted.
David Cresswell, head of communications at the FOS, said: “By firms paying per additional case on top of those allocated, the total bill paid will reflect the cost of the work load involved both for small and large firms. We will need more focused discussion to see how this may work. A firm that gets two cases a year will have a very different view to a firm that gets 12.”
Chris Cummings, director-general at the Association of Mortgage Intermediaries (AMI), commented: “With the number of cases increasing year-on-year as a result of regulation, we would like to see a model that has five or more cases incorporated into the levy fee. For complaints against small firms, over 70 per cent of cases will find the broker has done nothing wrong but the firm will still have to pay. We want to see the Ombudsman handle small firms with a separate division.”
