feedback on the Financial Ombudsman Service plan & budget 2003/04
April 2003
- In January 2003 we published our plan & budget, a consultation document on our budget and workload projections for 2003/04.
- Since these projections were put together in December 2002, there has been a significant increase in the number of enquiries to our Customer Contact Division (CCD), and a corresponding increase in the number of new cases referred on to the casework divisions. Our estimate for new cases received in the current year, 2002/03, has therefore increased from 55,000 to 58,500.
- In our plan & budget, we had included a model based on a 10% increase in our workload in the financial year 2003/04. In order to deal with this increase, we propose to:
- increase our staffing levels from 550 to 583 by March 2004;
- close an additional 4,000 cases;
- maintain productivity levels and timeliness targets; and
- leave our tariff rates unchanged.
These proposals will also reduce the unit cost to £541, by spreading our fixed costs over a greater number of case closures.
- We have decided to change our workload assumptions as, in the first months of 2003, the number of enquiries to CCD about mortgage endowment policies has increased by 10%. They now represent 25% of CCD's current workload. Inevitably this will lead to an increase in casework as a proportion of these enquiries are converted into chargeable cases. From feedback at the meetings we held during the budget consultation period, it would seem that the level of work relating to mortgage endowments will increase in 2003. Additionally, we have received comments indicating that our estimate for the number of complaints about single-premium investment bonds coming to us was low.
- We have therefore increased from 16,000 to 20,000 our estimate for new complaints about mortgage endowment policies coming to us in 2003/04. And we have increased from 2,500 to 3,500 our estimate for the number of complaints about single-premium investment bonds coming to us in the same period.
- To try and maintain our timeliness targets for resolving cases, we propose to recruit an additional 25 members of staff for our casework divisions. Half of these staff will be in post by 1 April 2003 and the remainder by 1 July 2003. This will enable us to close an additional 4,000 cases during 2003/04.
- The revenue from the higher number of cases we will be closing will finance the additional staff, so there will be no increase in the annual levy tariff rates. The unit cost will fall to £541. This means that 65% of our funding will be raised through case fees and 35% through the general levy.
- These changes to our budget were approved by the Board of the Financial Services Authority at their March meeting.
- The revised figures showing our actual, forecast and budgeted workload are as follows:
summary
| 2001/02 actual | 2002/03 forecast | 2003/04 original budget | 2003/04 revised budget | |
|---|---|---|---|---|
| opening work-in-progress | 14,781 | 18,917 | 19,417 | 21,917 |
| new cases | 43,330 | 58,500 | 55,000 | 60,000 |
| cases closed | 39,194 | 55,500 | 59,000 | 63,000 |
| closing work-in-progress | 18,917 | 21,917 | 15,417 | 18,917 |
| work on hand (weeks) | 22 | 21 | 14 | 16 |
| productivity | 3.8 | 4.7 | 4.4 | 4.4 |
| cases closed within 3 months | 45% | 45% | ||
| cases closed within 6 months | 73% | 78% | 80% | 80% |
| cases closed within 9 months | 90% | 90% | ||
| cases closed in under 12 months | 100% | 96% | ||
| cases closed in over 12 months | reported to the board | |||
Customer Contact Division (CCD)
| 9 months 2002/03 | forecast 2002/03 | original budget 2003/04 | revised budget 2003/04 | |
|---|---|---|---|---|
| telephone calls | 190,000 | 260,000 | 260,000 | 285,000 |
| new written enquiries | 56,000 | 70,000 | 67,000 | 75,000 |
| total | 246,000 | 330,000 | 327,000 | 360,000 |
New Complaints - analysis by product
| actual 2001/02 | forecast 2002/03 | original budget 2003/04 | revised budget 2003/04 | |
|---|---|---|---|---|
| dual variable-rate mortgages | 575 | 6,500 | 0 | 0 |
| endowment policies linked to mortgages | 14,595 | 11,850 | 16,000 | 20,000 |
| personal pensions | 5,881 | 6,000 | 6,000 | 6,000 |
| non-mortgage linked endowments | 3,647 | 3,400 | 3,500 | 3,500 |
| mortgage loans | 3,301 | 2,900 | 3,400 | 3,400 |
| motor insurance | 1,609 | 2,400 | 2,400 | 2,400 |
| single-premium investment bonds | 362 | 2,200 | 2,500 | 3,500 |
| split capital investment trusts | 0 | 2,500 | 3,000 | 3,000 |
| current accounts | 1,280 | 1,400 | 1,500 | 1,500 |
| savings accounts | 1,230 | 1,300 | 1,500 | 1,500 |
| buildings insurance | 985 | 1,250 | 1,250 | 1,250 |
| travel insurance | 884 | 1,000 | 1,000 | 1,000 |
| other banking products | 1,642 | 3,300 | 3,500 | 3,500 |
| other insurance products | 3,277 | 5,000 | 4,850 | 4,850 |
| other investment products | 4,062 | 7,500 | 4,600 | 4,600 |
| total | 43,330 | 58,500 | 55,000 | 60,000 |
expenses
| £m | actual 2001/02 | forecast 2002/03 | original budget 2003/04 | revised budget 2003/04 |
|---|---|---|---|---|
| staff and staff-related costs | 19.7 | 21.3 | 22.9 | 24.4 |
| professional fees | 0.5 | 0.6 | 0.4 | 0.4 |
| IT costs | 0.8 | 0.9 | 1.3 | 1.4 |
| premises and facilities | 3.5 | 4.0 | 4.2 | |
| other costs | 0.3 | 0.4 | 0.5 | 0.5 |
| depreciation | 2.7 | 2.7 | 3.2 | 3.2 |
| operating costs | 27.5 | 29.9 | 32.5 | 34.1 |
| financing costs | 0.7 | 0.4 | 0.6 | 0.6 |
| total costs | 28.2 | 30.3 | 33.1 | 34.7 |
| cases closures | 40,000 | 55,500 | 59,000 | 63,000 |
| unit cost | 688 | 540 | 551 | 541 |
unit cost is calculated before financing charges
Headcount ("full-time equivalent")
| budget 2002/03 | forecast 2002/03 | original budget 2003/04 | revised budget 2003/04 | |
|---|---|---|---|---|
| casework divisions | 298 | 353 | 383 | 408 |
| customer contact division | 87 | 85 | 85 | 93 |
| communications | 16 | 17 | 18 | 18 |
| business improvement | 9 | 9 | 9 | 9 |
| knowledge management | 3 | 7 | 8 | 8 |
| sub-total | 115 | 118 | 120 | 128 |
| support services | 45 | 45 | 47 | 47 |
| total | 458 | 516 | 550 | 583 |