DISP 5.1 Application

DISP 5.1.1 R 01/04/2002

1This 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.

DISP 5.1.2 G 01/04/2002

The relevant provisions of DISP 5 are applied to VJ participants by the standard terms (see DISP 4).

DISP 5.1.3 G 01/04/2002

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); 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.

Exemption

DISP 5.1.4 R 01/04/2002

A firm which is exempt under DISP 1.1.7 R is also exempt from DISP 5.2 to DISP 5.8.

DISP 5.1.5 R 01/04/2002

A firm which ceases to be exempt under DISP 5.1.4 is to be treated, for the purposes of its contribution to the general levy, as a firm to which DISP 5.9 applies.

DISP 5.1.6 R 01/04/2002

A firm which becomes exempt under DISP 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 DISP 5.10 applies.

DISP 5.2 Purpose

DISP 5.2.1 G 01/04/2004

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.1 It also provides for unauthorised persons to pay case fees to FOS Ltd in respect of any relevant complaints which it handles.

DISP 5.3 Introduction

DISP 5.3.1 G 01/04/2002

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.

DISP 5.3.2 G 01/04/2002

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)
establishing the Financial Ombudsman Service; and
(2)
its operation in relation to the Compulsory Jurisdiction.

DISP 5.3.3 G 01/04/2002

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.

DISP 5.3.4 G 01/04/2002

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.

DISP 5.3.5 G 01/04/2002

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.

DISP 5.3.6 G 01/04/2002

The relevant provisions of these rules 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).

DISP 5.3.7 G 01/04/2002

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 (DISP 5 Annex 1R R). A new annex will be prepared and consulted on for each financial year.

DISP 5.4 The general levy

DISP 5.4.1 G 01/04/2002

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.

DISP 5.4.2 G 01/04/2002

For the purposes of the general levy, a firm will fall into one or more of the industry blocks set out in DISP 5 Annex 1R R depending on the business activities which it conducts.

DISP 5.4.3 G 01/04/2002

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 DISP 5.6.3 R to DISP 5.6.5 G).

DISP 5.4.4 G 01/04/2002

Part 2 of DISP 5 Annex 1R Rsets out the fee tariffs for each industry block.

DISP 5.4.5 G 01/04/2002

The FSA will specify a minimum levy for firms in each industry block.

DISP 5.4.6 R 01/04/2004

A firm must pay to the FSA 1a general levy towards the costs of operating the Compulsory Jurisdiction of the Financial Ombudsman Service.

DISP 5.4.7 G 01/04/2004

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.1

DISP 5.4.8 R 01/04/2002

A firm's general levy is calculated as follows:

(1)
identify each of the tariff bases set out in part 2 of DISP 5 Annex 1R R 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).

DISP 5.4.9 R 01/04/2002

For the purpose of DISP 5.4.6 R and DISP 5.4.8 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.

DISP 5.4.10 R 31/10/2004

2For the purpose of DISP 5.4, references to relevant business for a firm which falls in industry block 16 or 17 and which so elects under part 2 of DISP 5 Annex 1R R, are references to the firm's total amount of annual income reported in accordance with Part 2 of SUP 20 Annex 1.

DISP 5.5 Information requirement

DISP 5.5.1 R 31/10/2004

(1)
A firm must provide the FSA by the end of February each year 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 DISP 5 Annex 1R R.
(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 DISP 5.5.1 R, it must provide the best estimate of the amount of relevant business that it conducted.
(4)
For the purpose of DISP 5.5.1 R, references to relevant business for a firm which falls in industry block 16 or 17 and which so elects under part 2 of DISP 5 Annex 1R R, are references to the firm's total amount of annual income reported in accordance with Part 2 of SUP 20 Ann 1.2

DISP 5.5.2 G 01/04/2002

SUP 16.3 (General provisions on reporting) contains further rules on the method of submission of reports under DISP 5.5.1 R.

DISP 5.5.2A G 01/04/2003

1A 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 DISP 5.5.1 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 DISP 5.6.6 R).

DISP 5.6 Case fees

Standard case fee

DISP 5.6.1 R 01/04/2002

A firm must pay to FOS Ltd the standard case fee specified in part 3 of DISP 5 Annex 1R R 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 DISP 5.6.6 R to DISP 5.6.12 R.

DISP 5.6.2 G 01/04/2002

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.

DISP 5.6.3 R 01/04/2002

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.

DISP 5.6.4 R 01/04/2002

Any firm falling into either industry block 13 or industry block 15 in part 2 of DISP 5 Annex 1R R is not required to pay the standard case fee in respect of chargeable cases relating to those industry blocks.

DISP 5.6.5 G 01/04/2002

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 DISP 5.6.3 R in respect of small credit unions.

Special case fees: complaints from small businesses

DISP 5.6.6 R 01/04/2002

A firm must pay to FOS Ltd a special case fee, as specified in part 3 of DISP 5 Annex 1R R 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).

Special case fees: firms which cease to be authorised

DISP 5.6.7 R 01/04/2002

A firm which ceases to be authorised must pay to FOS Ltd a special case fee, as specified in part 3 of DISP 5 Ann 1R, 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.

Special case fees: relevant complaints against persons who were subject to a former scheme

DISP 5.6.8 R 01/04/2002

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 DISP 5 Annex 1R R in respect of each chargeable case relating to that unauthorised person closed by the Financial Ombudsman Service.

DISP 5.6.9 G 01/04/2002

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.

Special case fees for 2001/02

DISP 5.6.10 R 01/04/2002

A firm which was a member of PIA before commencement must pay to FOS Ltd a special case fee, as specified in DISP 5 Annex 1R R, in respect of each chargeable case relating to that firm received by the Financial Ombudsman Service after commencement and before 31 March 2002.

DISP 5.6.11 R 01/04/2002

DISP 5.6.10 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.

DISP 5.6.12 R 01/04/2002

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 DISP 5 Annex 1R R, 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.

DISP 5.6.13 G 01/04/2002

The relevant provisions of DISP 5.6 will be applied to VJ participants through the standard terms.

DISP 5.6.14 G 01/04/2002

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 DISP 5.6.11 R, be required to pay the special case fee specified by DISP 5.6.10 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.

DISP 5.7 The supplementary levy

DISP 5.7.1 G 01/04/2002

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 DISP 5 Annex 1R R).

DISP 5.7.2 G 01/04/2002

The establishment costs will be recovered via the supplementary levy over the first three full financial years of the Financial Ombudsman Service's operation.

DISP 5.7.3 G 01/04/2002

The amount of establishment costs to be raised each year through the supplementary levy will be specified in part 2 of DISP 5 Annex 1R R.

DISP 5.7.4 G 01/04/2002

The supplementary levy will be identified separately from the general levy for the purposes of invoicing firms and VJ participants.

DISP 5.7.5 R 01/04/2002

A firm must pay to the FSA 1 a supplementary levy towards the costs of establishing the Financial Ombudsman Service.

DISP 5.7.6 R 01/04/2002

A firm's supplementary levy is a sum payable in accordance with the fee tariffs set out in part 2 of DISP 5 Ann 1R and will be calculated by following the steps set out in DISP 5.4.8R.

DISP 5.7.7 G 01/04/2002

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.

DISP 5.8 Payment

DISP 5.8.1 R 01/04/2004

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.1

DISP 5.8.2 R 01/04/2002

A firm must pay to FOS Ltd any standard case fee or special case fee which it is liable to pay under DISP 5.6.1 R, DISP 5.6.6 R, DISP 5.6.7 R, DISP 5.6.8 R, DISP 5.6.10 R, or DISP 5.6.12 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.

DISP 5.8.3 G 01/04/2002

The Financial Ombudsman Service will invoice firms for case fees on a monthly basis and firms will be required to pay these fees within 30 calendar days of receiving the invoice.

DISP 5.8.4 R 01/04/2002

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.

DISP 5.8.5 G 01/04/2002

The FSA will issue invoices for the general levy and any supplementary levy. FOS Ltd will issue invoices for standard case fees and special case fees. Each invoice will be payable within 30 calendar days. Invoices will be sent to the firm's Compliance Officer at the principal place of business in the United Kingdom last notified to the FSA. A firm which is liable to pay under DISP 5.8.1 R may do so by direct debit agreement.1

DISP 5.8.6 R 01/04/2002

If a firm or an unauthorised person does not pay a levy or case fee in full within 30 calendar days of the date when the invoice is issued, it must, from that date, pay interest at 10% per annum for each day the unpaid part remains outstanding.

DISP 5.8.7 G 01/04/2002

If a firm (or unauthorised person) subject to the Compulsory Jurisdiction fails to make payment under this chapter of standard or special case fees, after expiry of the 30 day period, FOS Ltd may:1

(1)
Take steps to recover any money owed (including interest);
(2)
Refer the matter to the FSA so that the FSA may take whatever disciplinary action it considers necessary.

DISP 5.8.7A G 01/04/2004

1If a firm (or unauthorised person) fails to make payment under this chapter of the general levy and any supplementary levy to which it is subject, after the expiry of the 30 day period, the FSA may take whatever action it considers appropriate including steps to recover any money owed (with interest) and commencing disciplinary proceedings.

DISP 5.8.8 R 01/04/2002

If it appears to the FSA or FOS Ltd that, owing to the exceptional circumstances of a particular case, the payment of any fee would be inequitable, the FSA or FOS Ltd may reduce or remit all or part of the fee in question which would otherwise be payable.

DISP 5.8.9 R 01/04/2002

If it appears to the FSA or FOS Ltd that, owing to the exceptional circumstances of a particular case to which DISP 5.8.8 R does not apply, the retention by the FSA or FOS Ltd of a fee which has been paid would be inequitable, the FSA or FOS Ltd may refund all or part of the fee.

DISP 5.9 Joining the Financial Ombudsman Service

DISP 5.9.1 R 01/04/2002

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 DISP 5.9.2 R.

DISP 5.9.2 R 01/04/2002

Table DISP 5.9.2

Quarter in which the firm becomes subject to the Financial Ombudsmen Service	Proportion payable
1 April to 30 June inclusive	100%
1 July to 30 September inclusive	75%
1 October to 31 December inclusive	50%
1 January to 31 March inclusive	25%

DISP 5.10 Leaving the Financial Ombudsman Service

DISP 5.10.1 R 01/04/2002

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 DISP 5.6.7 Rin respect of any other chargeable cases against it closed by the Financial Ombudsman Service.

DISP 5.10.2 G 01/04/2002

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.1

DISP 5 Annex 1R DISP 5 Ann 1R: Annual Fees Payable in relation to 2004/05

R 31/10/2004

2 1 Introduction: annual budget
1.	The annual budget for 2004/05 approved by the FSA is £45m.
Part 1: General levy and supplementary levy
2.	The total amount expected to be raised through the general levy in 2004/05will be £12.5m.
Part 2: Fee tariffs for general levy and supplementary levy
3.	No establishment costs will be raised in 2004/05by 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	£0.0069per relevant account, subject to a minimum levy of £200
2-Insurers - general (excluding firms in blocks 13 & 15)3	Relevant annual gross premium income	£0.081 per £1,000 of relevant annual gross premium income, subject to a minimum levy of £200
3-The Society (of Lloyd's)	To be allocated by the Society	£47,266 to be allocated by the Society
4-Insurers - life (excluding firms in block 15)3	Relevant adjusted annual gross premium income	£0.093 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	£0.00255 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 £75
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)	£65 per relevant approved person (controlled functions 21, 22, 24, 25, 26), subject to a minimum levy of £75
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)	£30 per relevant approved person (controlled functions 21, 22, 24, 25, 26), subject to a minimum levy of £75
10-Corporate finance advisers	Flat fee	Levy of £75
11-	N/A for 2004/05
12-	N/A for 2004/05
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)4	Either annual income reported in accordance with Part 2 of SUP 20 Annex 1 R from relevant business or the firm's total annual income reported in accordance with Part 2 of SUP 20 Annex 14	No levy is payable for 2004/20054
17 - General insurance mediation (excluding firms in blocks 13, 14 & 15)4	Either annual income reported in accordance with Part 2 of SUP 20 Annex 1 from relevant business or the firm's total annual income reported in accordance with Part 2 of SUP 20 Annex 14	No levy is payable for 2004/20054

5	The industry blocks in the table are based on the equivalent activity groups set out in Part 1 of SUP 20 Annex 1 R.
6	Where the tariff base in the table is defined in similar terms as that for the equivalent activity group in Part 2 of SUP 20 Annex 1 R, it must be calculated in the same way as that tariff base - taking into account only the firm's relevant business.
PART 3: Case fees

Governing Provisions	Case Fee	Amount
DISP 5.6.1 R	Standard	£360
DISP 5.6.6 R	Special case fee: complaints from small businesses	£550
DISP 5.6.7 R	Special case fee: firms which cease to be authorised	£550
DISP 5.6.8 R	Special case fee: relevant complaints against persons who were subject to a former scheme	£550

Part 4: Fee Tariffs and case fees for VJ participants

Voluntary jurisdiction industry block		Tariff base	General levy payable by firm	Minimum general levy per firm	Case Fee*
1V	Mortgage lenders and administrators	Number of relevant accounts	£0.069 per relevant account	£200	£360
2V	VJ participants undertaking insurance activities subject only to prudential regulation only	Relevant annual gross premium income	£0.081 per £1,000 of relevant annual gross premium income	£200	£360
3V	VJ participants undertaking insurance activities subject to prudential and conduct of business regulation	Relevant adjusted annual gross premium income	£0.093 per £1000 of relevant annual gross premium income	£100	£360
4V	Mortgage intermediaries	N/a	N/a	N/a	£550
5V	Insurance intermediaries	N/a	N/a	N/a	£550
6V	Other intermediaries	Flat fee	£200 flat fee	Not applicable	£360
7V	VJ participants not falling into any of the above categories	Not applicable	N/a	N/a	£550

9	The industry blocks in the table are based on the equivalent activity groups for authorised firms, as set out in part 1 of SUP 20 Annex 1 R.
10	Where the tariff base in the table is defined in similar terms as the tariff base for the equivalent activity group set out in part 2 of SUP 20 Annex 1 R, it must be calculated in the same way as that tariff base except that it takes into account only the VJ participant's relevant business.
11	'Relevant business' for the purposes of funding the Voluntary Jurisdiction means that part of a VJ participant's business which it conducts with private individuals and which is subject to the Voluntary Jurisdiction of the Financial Ombudsman Service as provided for in DISP 2.6.9 R (The Voluntary Jurisdiction), as measured by the appropriate tariff base for each industry block.

*note on case fees

As for the compulsory jurisdiction, firms will only be charged for the third and any subsequent chargeable case in any financial year, subject to the annual levy being invoiced and paid, where applicable

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