FOS freezes levy and cuts budget by 20%

The service has proposed to stick to its current levy of £23.3m, it said in its annual plan and budget consultation out today, and plans to reduce its budget from £313.7m spent in 2013/14 down to £251.9m.

It will also freeze the £550 fee for complaints cases - which is only payable after the 25th case - and scrap its supplementary £350 fee for mis-sold payment protection insurance (PPI) claims after "gearing up resources sufficiently to tackle the PPI workload".

Interim chief executive and chief ombudsman Tony Boorman said: "For the last few years our focus has been on building up our capacity to meet the unprecedented challenges of PPI.

"The investment we have made in scaling-up and developing our service is now paying off as we plan for another year of record activity, resolving twice as many PPI cases as we receive. But we're not out of the PPI woods yet.

"Across all of our work we continue to hear that people's dealings with financial businesses remain strained, suggesting a lot more work is required to restore consumer trust in financial services."

The FOS had introduced the supplementary PPI fee in April 2012 ahead of an anticipated surge in PPI claims, in order build up resources to be able to tackle the vast numbers of complaints.

The £350 fee was added to the £550 case fee levied on each case succeeding the first 25 'free' cases brought against a firm.

The FOS increased the individual fee for firms who have complaints against them from £500 to £550 per case in last year's budget, while upping the number of 'free' cases from three to 25.

It had previously frozen its case fee at £500 for four years.

The FOS is also currently looking for a successor to departed chief executive Natalie Ceeney who stepped down in November after four years in office.

Following her departure the service is being run by deputy chief ombudsman, Tony Boorman, who will remain at the helm until further notice.