FEES 5
Financial Ombudsman Service Funding
FEES 5.1
Application and Purpose
- 01/01/2006
Application
FEES 5.1.1
See Notes
This chapter applies to:
- (1) every firm which is subject to the Compulsory Jurisdiction of the Financial Ombudsman Service; and
- (2) every other person who is subject to the Compulsory Jurisdiction in relation to relevant complaints.
- 01/01/2006
FEES 5.1.2
See Notes
The relevant provisions of FEES 5 are applied to VJ participants by the standard terms (see DISP 4).
- 01/01/2006
FEES 5.1.3
See Notes
References in this chapter to "firms" are to be construed, where relevant, as including:
- (1) in accordance with the Ombudsman Transitional Order, unauthorised persons subject to the Compulsory Jurisdiction in relation to relevant complaints (see Transitional Provisions 6 and 7 of DISP); and
- (2) as a result of section 226 of the Act, unauthorised persons who were formerly firms in respect of complaints about acts or omissions which occurred at the time when they were firms, provided that the Compulsory Jurisdiction rules were in force in relation to the activity in question.
- 01/01/2006
Exemption
FEES 5.1.4
See Notes
- 01/01/2006
FEES 5.1.5
See Notes
A firm which ceases to be exempt under FEES 5.1.4 R is to be treated, for the purposes of its contribution to the general levy, as a firm to which FEES 5.8 applies.
- 01/01/2006
FEES 5.1.6
See Notes
A firm which becomes exempt under FEES 5.1.4 R during the course of a financial year is to be treated for the purposes of its contribution to the general levy, as a firm to which FEES 5.9 applies.
- 01/01/2006
Purpose
FEES 5.1.7
See Notes
The purpose of this chapter is to set out the requirements on firms to pay annual fees (through a general levy and supplementary levy invoiced and collected by the FSA on behalf of FOS Ltd) and case fees (invoiced and collected directly by FOS Ltd) in order to fund the operation of the Financial Ombudsman Service. This chapter also contains a requirement on firms to pay a supplementary levy towards the costs of establishing the Financial Ombudsman Service. It also provides for unauthorised persons to pay case fees to FOS Ltd in respect of any relevant complaints which it handles.
- 01/01/2006
FEES 5.2
Introduction
- 01/01/2006
FEES 5.2.1
See Notes
Paragraph 9 of Schedule 17 to the Act (The Ombudsman Scheme) requires FOS Ltd to adopt an annual budget which has been approved by the FSA. The annual budget must distinguish between the costs of operating the Compulsory Jurisdiction and the Voluntary Jurisdiction.
- 01/01/2006
FEES 5.2.2
See Notes
Section 234 of the Act (Industry Funding) enables the FSA to require the payment to it or to FOS Ltd, by firms or any class of firm, of specified amounts (or amounts calculated in a specified way) to cover the costs of:
- (1) the Financial Ombudsman Service; and
- (2) its operation in relation to the Compulsory Jurisdiction.
- 01/01/2006
FEES 5.2.3
See Notes
Paragraph 15 of Schedule 17 to the Act enables FOS Ltd to require firms subject to the Compulsory Jurisdiction and any other respondents to a complaint to pay specified fees to it in respect of complaints closed by the Financial Ombudsman Service.
- 01/01/2006
FEES 5.2.4
See Notes
The Ombudsman Transitional Order provides for unauthorised persons to be charged fees in respect of any relevant complaints against them which the Financial Ombudsman Service handles.
- 01/01/2006
FEES 5.2.5
See Notes
Paragraph 18 of Schedule 17 to the Act enables FOS Ltd to require VJ participants to pay to it such amounts at such times as it specifies in the standard terms.
- 01/01/2006
FEES 5.2.6
See Notes
The relevant provisions of the rules in FEES 5 and FEES 2 will be applied to VJ participants through the standard terms made by FOS Ltd under paragraph 18 of Schedule 17 to the Act (see DISP 4).
- 01/01/2006
FEES 5.2.7
See Notes
This chapter sets out the framework for the funding arrangements of the Financial Ombudsman Service, including the method by which fees will be calculated. Details of the actual fees payable will vary from year to year, depending on the annual budget of the Financial Ombudsman Service. These details will be set out in an annex to this chapter (FEES 5 Annex 1). A new annex will be prepared and consulted on for each financial year.
- 01/01/2006
FEES 5.3
The general levy
- 01/01/2006
FEES 5.3.1
See Notes
Each financial year, the FSA and FOS Ltd will consult on the amount of the annual budget of the Financial Ombudsman Service which is to be raised by the general levy.
- 01/01/2006
FEES 5.3.2
See Notes
For the purposes of the general levy, a firm will fall into one or more of the industry blocks set out in FEES 5 Annex 1 depending on the business activities which it conducts.
- 01/01/2006
FEES 5.3.3
See Notes
The
FSA
will determine, following consultation, the amount to be raised from each industry block. This will be based on the budgeted costs and numbers of Financial Ombudsman Service staff required to deal with the volume of complaints which the Financial Ombudsman Service expects to receive about the firms in each industry block. Modified arrangements have been made for certain types of small firms (see FEES 5.5.3 R to FEES 5.5.5 G).
- 01/01/2006
FEES 5.3.4
See Notes
Part 2 of
FEES 5 Annex 1 sets out the fee tariffs for each industry block.
- 01/01/2006
FEES 5.3.5
See Notes
- 01/01/2006
FEES 5.3.6
See Notes
A firm must pay to the
FSA
a general levy towards the costs of operating the Compulsory Jurisdiction of the Financial Ombudsman Service.
- 01/01/2006
FEES 5.3.7
See Notes
Under the standard terms, VJ participants will be required to pay to FOS Ltd an amount calculated on a similar basis towards the costs of operating the Voluntary Jurisdiction of the Financial Ombudsman Service. FOS Ltd will be responsible for invoicing and collecting this amount.
- 01/01/2006
FEES 5.3.8
See Notes
A firm's general levy is calculated as follows:
- (1) identify each of the tariff bases set out in Part 2 of FEES 5 Annex 1 which apply to the relevant business of the firm for the relevant year;
- (2) for each of those tariff bases, calculate the sum payable in relation to the relevant business of the firm for that year;
- (3) add together the amounts calculated under (2).
- 01/01/2006
FEES 5.3.9
See Notes
For the purpose of FEES 5.3.6 R and FEES 5.3.8 R, a member of the Society of Lloyd's or a managing agent at Lloyd's will not in that capacity be treated as a firm. But the Society of Lloyd's will pay a general levy in respect of Lloyd's insurance business conducted with eligible complainants.
- 01/01/2006
FEES 5.3.10
See Notes
For the purpose of FEES 5.3, references to relevant business for a firm which falls in industry block 16 or 17 and which so elects under Part 2 of
FEES 5 Annex 1, are references to the firm's total amount of annual income reported in accordance with Part 2 of FEES 4.
- 01/01/2006
FEES 5.4
Information requirement
- 01/01/2006
FEES 5.4.1
See Notes
- (1) A firm must provide the FSA by the end of February each year (or, if the firm has become subject to the Financial Ombudsman Service part way through the financial year, by the date requested by the FSA) with a statement of the total amount of relevant business (measured in accordance with the appropriate tariff base(s)) which it conducted, as at or in the year to 31 December of the previous year as appropriate, in relation to the tariff base for each of the relevant industry blocks set out in part 2 of FEES 5 Annex 1.
- (2) Paragraph (1) does not apply if the firm pays a general levy on a flat fee basis only.
- (3) If a firm cannot provide a statement of the total amount of relevant business as required by FEES 5.4.1 R, it must provide the best estimate of the amount of relevant business that it conducted.
- (4) For the purpose of FEES 5.4.1 R, references to relevant business for a firm which falls in industry block 16 or 17 and which so elects under part 2 of FEES 5 Annex 1, are references to the firm's total amount of annual income reported in accordance with Part 2 of FEES 4 Annex 1.
- (5) If a firm does not submit a complete statement by the date on which it is due in accordance with this rule and any prescribed submission procedures:
- (a) the firm must pay an administrative fee of 250 (but not if it is already subject to an administrative fee under FEES 4 Annex 2, Part 1 or FEES 6.5.16 R for the same financial year); and
- (b) the general levy and any supplemental levy will be calculated using (where relevant) the valuation or valuations of business applicable to the previous period, multiplied by the factor of 1.10 (or, if a firm has become subject to the Financial Ombudsman Service part way through the financial year, on the basis of the information provided to FSA for the purposes of FEES 4.4.2 R) or on any other reasonable basis, making such adjustments as seem appropriate in subsequent levies once the true figures are known.
- 01/01/2006
FEES 5.4.2
See Notes
- 01/01/2006
FEES 5.4.3
See Notes
SUP 16.3 (General provisions on reporting) contains further rules on the method of submission of reports under FEES 5.4.1 R.
- 01/01/2006
FEES 5.4.4
See Notes
A firm should not provide a statement of relevant business if it deals only with eligible complainants who are not private individuals. Relevant business is defined in the Glossary as business done with private individuals only. So FEES 5.4.1 R does not apply in relation to business done with other types of eligible complainant described in
DISP 2.4.3 R (1)(b), (c) and (d); the funding of FOS Ltd in relation to that business is by special case fee only (see FEES 5.5.6 R).
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FEES 5.5
Case fees
- 01/01/2006
Standard case fee
FEES 5.5.1
See Notes
A firm must pay to FOS Ltd the standard case fee specified in part 3 of FEES 5 Annex 1 in respect of each chargeable case relating to that firm which is closed by the Financial Ombudsman Service, unless a special case fee is payable or has been paid in respect of that case under FEES 5.5.6 R to FEES 5.5.12 R.
- 01/01/2006
FEES 5.5.2
See Notes
The standard case fee, which will be subject to consultation each year, will be calculated by dividing the annual budget for the Compulsory Jurisdiction, less the amount to be raised by the general levy, by the estimated number of chargeable cases which the Financial Ombudsman Service expects to close in the relevant financial year.
- 01/01/2006
FEES 5.5.3
See Notes
A credit union which is subject to the minimum levy in an industry block is not required to pay a standard case fee in respect of chargeable cases relating to that industry block.
- 01/01/2006
FEES 5.5.4
See Notes
Any firm falling into either industry block 13 or industry block 15 in part 2 of
FEES 5 Annex 1 is not required to pay the standard case fee in respect of chargeable cases relating to those industry blocks.
- 01/01/2006
FEES 5.5.5
See Notes
The firms in industry blocks 13 and 15 are cash plan health providers and small friendly societies. These arrangements have been made in respect of these firms to take account of the fact that the amount at issue is likely to be small relative to the case fee. Instead, the full unit cost of handling complaints against these firms will be recovered through the general levy in accordance with the relevant tariff-base and no case fee will be payable. Similar arrangements have been made under FEES 5.5.3 R in respect of small credit unions.
- 01/01/2006
Special case fees: complaints from small businesses
FEES 5.5.6
See Notes
A firm must pay to FOS Ltd a special case fee, as specified in part 3 of FEES 5 Annex 1 in respect of each chargeable case relating to that firm closed by the Financial Ombudsman Service which was referred to the Financial Ombudsman Service by eligible complainants who fall within
DISP 2.4.3 R (1)(b), (c) or (d).
- 01/01/2006
Special case fees: firms which cease to be authorised
FEES 5.5.7
See Notes
A firm which ceases to be authorised must pay to FOS Ltd a special case fee, as specified in part 3 of FEES 5 Annex 1, in respect of each chargeable case relating to that firm closed by the Financial Ombudsman Service which concerned an act or omission occurring when the firm was authorised and where the complaint was made after its authorisation ceased.
- 01/01/2006
Special case fees: relevant complaints against persons who were subject to a former scheme
FEES 5.5.8
See Notes
An unauthorised person who is subject to the Compulsory Jurisdiction in relation to a relevant complaint must pay to FOS Ltd a special case fee as specified in part 3 of FEES 5 Annex 1 in respect of each chargeable case relating to that unauthorised person closed by the Financial Ombudsman Service.
- 01/01/2006
FEES 5.5.9
See Notes
Under the Ombudsman Transitional Order, FOS Ltd can handle complaints about members of a former scheme which that scheme could have handled before commencement, even if the unauthorised person concerned does not become authorised by the FSA after that date. Where FOS Ltd handles such complaints, the unauthorised person concerned will be required to pay a special case fee.
- 01/01/2006
Special case fees for 2001/02
FEES 5.5.10
See Notes
A firm which was a member of PIA before commencement must pay to FOS Ltd a special case fee, as specified in FEES 5 Annex 1, in respect of each chargeable case relating to that firm received by the Financial Ombudsman Service after commencement and before 31 March 2002.
- 01/01/2006
FEES 5.5.11
See Notes
FEES 5.5.10 R does not apply in relation to a chargeable case which relates to a complaint which proceeded or would have proceeded under a former scheme other than the PIAOB scheme.
- 01/01/2006
FEES 5.5.12
See Notes
A firm which was not a member of a former scheme before the commencement day must pay to FOS Ltd a special case fee, as specified in FEES 5 Annex 1, in respect of each chargeable case which relates to business conducted by the firm after the commencement day and which is closed by the Financial Ombudsman Service before 31 March 2002.
- 01/01/2006
FEES 5.5.13
See Notes
- 01/01/2006
FEES 5.5.14
See Notes
A firm which was, before commencement, a member of PIA and a former scheme other than the PIAOB scheme will not, on account of the exclusion in FEES 5.5.11 R, be required to pay the special case fee specified by FEES 5.5.10 R in respect of all chargeable cases relating to it but only those which arise in respect of investment business matters which would have been eligible under the PIAOB scheme.
- 01/01/2006
Case fee exemption
FEES 5.5.15
See Notes
Notwithstanding the above, a firm will only be liable for, and FOS will only invoice for, the standard case fee or, as the case may be, the special case fee, in respect of the third and subsequent chargeable cases in any financial year.
- 01/01/2006
FEES 5.6
The supplementary levy
- 01/01/2006
FEES 5.6.1
See Notes
For the purposes of calculating the supplementary levy, the FSA will apportion the establishment costs between the industry blocks in the same proportions as the operating costs for the purposes of the general levy. The supplementary levy will therefore be raised from firms on the same basis and at the same time as the general levy (see part 2 of FEES 5 Annex 1).
- 01/01/2006
FEES 5.6.2
See Notes
The establishment costs will be recovered via the supplementary levy over the first three full financial years of the Financial Ombudsman Service's operation.
- 01/01/2006
FEES 5.6.3
See Notes
The amount of establishment costs to be raised each year through the supplementary levy will be specified in part 2 of FEES 5 Annex 1.
- 01/01/2006
FEES 5.6.4
See Notes
The supplementary levy will be identified separately from the general levy for the purposes of invoicing firms and VJ participants.
- 01/01/2006
FEES 5.6.5
See Notes
A firm must pay to the FSA a supplementary levy towards the costs of establishing the Financial Ombudsman Service.
- 01/01/2006
FEES 5.6.6
See Notes
A firm's supplementary levy is a sum payable in accordance with the fee tariffs set out in part 2 of FEES 5 Annex 1 and will be calculated by following the steps set out in FEES 5.3.8 R.
- 01/01/2006
FEES 5.6.7
See Notes
Under the standard terms, VJ participants will also be required to pay an amount calculated on a similar basis towards the costs of establishing the Voluntary Jurisdiction of the Financial Ombudsman Service.
- 01/01/2006
FEES 5.7
Payment
- 01/01/2006
FEES 5.7.1
See Notes
A firm must pay annually to the FSA the general levy and any supplementary levy to which it is subject, on or before the later of 1 April and 30 calendar days after the date when the invoice is issued by the FSA.
- 01/01/2006
FEES 5.7.2
See Notes
A firm must pay to FOS Ltd any standard case fee or special case fee which it is liable to pay under FEES 5.5.1 R, FEES 5.5.6 R, FEES 5.5.7 R, FEES 5.5.8 R, FEES 5.5.10 R, or FEES 5.5.12 R, as appropriate, in respect of chargeable cases for which it is invoiced by FOS Ltd within 30 calendar days of the date when the invoice is issued by FOS Ltd.
- 01/01/2006
FEES 5.7.3
See Notes
A firm or an unauthorised person who is subject to the Compulsory Jurisdiction in relation to a relevant complaint must pay any standard case fee or special case fee within 30 calendar days of the date when the invoice is issued by FOS Ltd.
- 01/01/2006
FEES 5.7.4
See Notes
A firm liable to pay fees under FEES 5.7.1 R must do so using one of the methods set out in FEES 4.2.4 R save that no additional amount or discount is applicable.
- 01/01/2006
FEES 5.8
Joining the Financial Ombudsman Service
- 01/01/2006
FEES 5.8.1
See Notes
A firm which becomes subject to the Financial Ombudsman Service part way through a financial year must pay a rateable proportion of the general levy and the supplementary levy as indicated in Table FEES 4.2.6 R, as if that table applied to the quarter in which a firm becomes subject to the Financial Ombudsman Service.
- 01/01/2006
FEES 5.9
Leaving the Financial Ombudsman Service
- 01/01/2006
FEES 5.9.1
See Notes
Where a firm ceases to be authorised part way through a financial year:
(1) it will remain liable to pay standard case fees in respect of chargeable cases against it closed by the Financial Ombudsman Service for the remainder of that financial year; and
(2) it must pay the special case fee specified under FEES 5.5.7 R in respect of any other chargeable cases against it closed by the Financial Ombudsman Service.
- 01/01/2006
FEES 5.9.2
See Notes
Firms which cease to be authorised and therefore subject to the Compulsory Jurisdiction part way through the year will not receive a refund of their general levy (or supplementary levy) except in exceptional circumstances. Firms will continue to be liable for any case fees relating to chargeable cases closed by the Financial Ombudsman Service after they cease to be authorised. Firms will be charged the standard case fee where the complaint was closed by the Financial Ombudsman Service before the end of the year in which their authorisation ceased. The special case fee will apply to any complaint closed after the end of that year since the firm will no longer be contributing to the general levy.
- 01/01/2006
FEES 5 Annex 1
Annual Fees Payable in Relation to 2006/07
- 01/04/2006
See Notes
Introduction: annual budget
1. The annual budget for 2006/07 approved by the FSA is 59.2m.
Part 1: General levy and supplementary levy
2. The total amount expected to be raised through the general levy in 2006/07 will be 15.8m.
Part 2: Fee tariffs for general levy and supplementary levy
3. No establishment costs will be raised in 2006/07 by the supplementary levy.
Part 3: Case fees
Table: Standard case fees and special case fees
Part 4: VJ participants
Table: Fee tariffs and case fees for VJ participants
1. The annual budget for 2006/07 approved by the FSA is 59.2m.
Part 1: General levy and supplementary levy
2. The total amount expected to be raised through the general levy in 2006/07 will be 15.8m.
Part 2: Fee tariffs for general levy and supplementary levy
3. No establishment costs will be raised in 2006/07 by the supplementary levy.
| Industry block | Tariff base | General levy payable by firm |
| 1-Deposit acceptors, mortgage lenders and administrators (excluding firms in block 14) | Number of accounts relevant to the activities in DISP 2.6.1 R | 0.0059 per relevant account, subject to a minimum levy of 100 |
| 2-Insurers - general (excluding firms in blocks 13 & 15) | Relevant annual gross premium income | 0.055 per 1,000 of relevant annual gross premium income, subject to a minimum levy of 100 |
| 3-The Society (of Lloyd's) | Not applicable | 28,000 to be allocated by the Society |
| 4-Insurers - life (excluding firms in block 15) | Relevant adjusted annual gross premium income | 0.124 per 1,000 of relevant adjusted annual gross premium income, subject to a minimum levy of 100 |
| 5-Fund managers (including those holding client money/assets and not holding client money/assets) | Relevant funds under management | 0.0007 per 1,000 of relevant funds under management, subject to a minimum levy of 100 |
| 6-Operators, trustees and depositaries of collective investment schemes | Flat fee | Levy of 75 |
| 7-Dealers as principal | Flat fee | Levy of 50 |
| 8-Advisory arrangers, dealers or brokers holding and controlling client money and/or assets | Number of relevant approved persons (controlled functions 21, 22, 24, 25, 26) | 160 per relevant approved person (controlled functions 21, 22, 24, 25, 26), subject to a minimum levy of 160 |
| 9-Advisory arrangers, dealers or brokers not holding and controlling client money and/or assets | Number of relevant approved persons (controlled functions 21, 22, 24, 25, 26) | 45 per relevant approved person (controlled functions 21, 22, 24, 25, 26), subject to a minimum levy of 50 |
| 10-Corporate finance advisers | Flat fee | Levy of 50 |
| 11- | N/A for 2006/07 | |
| 12- | N/A for 2006/07 | |
| 13-Cash plan health providers | Flat fee | Levy of 50 |
| 14-Credit unions | Flat fee | Levy of 50 |
| 15-Friendly societies whose tax-exempt business represents 95% or more of their total relevant business | Flat fee | Levy of 50 |
| 16-Mortgage lenders, advisers and arrangers (excluding firms in blocks 13, 14 & 15) | Flat fee | Levy of 50 |
| 17 - General insurance mediation (excluding firms in blocks 13, 14 & 15) | Flat fee | Levy of 50 |
| 4 | [not used] |
| 5 | The industry blocks in the table are based on the equivalent activity groups set out in Part 1 of FEES 4 Annex 1. |
| 6 | Where the tariff base in the table is defined in similar terms as that for the equivalent activity group in Part 2 of FEES 4 Annex 1, it must be calculated in the same way as that tariff base - taking into account only the firm's relevant business. |
Table: Standard case fees and special case fees
| Compulsory jurisdiction - case fee table | ||
| case fee | ||
| standard case fee | 360 | (for the third chargeable complaint and any subsequent chargeable complaint in any financial year) |
| special case fee | 475 | (for the third chargeable complaint and any subsequent chargeable complaint in any financial year) |
| The definitions of standard case fee and special case fee are in FEES 5.5, replacing DISP 5.6 (case fees), in the FSA Handbook. | ||
| The definition of a chargeable case is in the Glossary to the FSA Handbook. | ||
Table: Fee tariffs and case fees for VJ participants
| Voluntary jurisdiction - general levy tariff and case fee table | |||||
| industry block and business activity | tariff basis | tariff rate | minimum levy | case fee* | |
| 1V | deposit acceptors, mortgage lenders and administrators, including debit/charge card issuers | number of relevant accounts | 0.0042 | 100 | 360 |
| 2V | firms undertaking insurance activities subject only to prudential regulation | per 1,000 of relevant annual gross premium income | 0.052 | 100 | 360 |
| 3V | firms undertaking insurance activities subject to prudential and conduct of business regulation | Per 1,000 of relevant adjusted annual gross premium income | 0.12 | 100 | 360 |
| 6V | intermediaries | n/a | n/a | 50 | 360 |
| 8V | National Savings | n/a | n/a | 10,000 | 360 |
| *note on case fees As for the compulsory jurisdiction, firms will only be charged for the third and subsequent chargeable case in any financial year. |
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- 01/06/2006