FEES 5.2 Introduction

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, the Consumer Credit Jurisdiction4 and the Voluntary Jurisdiction.

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. (1)

   the establishment of 1the Financial Ombudsman Service; and

2. (2)

   its operation in relation to the Compulsory Jurisdiction.

4Section 234A (1) of the Act (Funding by consumer credit licensees etc.) enables FOS Ltd from time to time and with the approval of the FSA to determine a sum which is to be raised by way of contributions under that section to cover the costs of:

1. (1)

   the establishment of the Financial Ombudsman Service so far as it relates to the Consumer Credit Jurisdiction;

2. (2)

   its operation in relation to the Consumer Credit Jurisdiction; and

3. (3)

   a component to cover the costs of collection of the contributions to that sum (collection costs).

4FOS Ltd must notify the Office of Fair Trading of every determination made under section 234A(1) and the Office of Fair Trading must give a general notice of every determination so notified. The Office of Fair Trading may by general notice impose requirements on

1. (1)

   licensees under standard licences which cover to any extent the carrying on of a type of business specified in an order made under section 226A(2)(e) of the Act; or

2. (2)

   persons who make applications for:

   1. (a)

      standard licences covering to any extent business of such a type; or

   2. (b)

      the renewal of standard licences on terms covering to any extent the carrying on of a business of such a type;

to pay contributions to the Office of Fair Trading for the purpose of raising sums determined by FOS Ltd in accordance with the provisions of section 234A (6) and (7) of the Act.

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.

4Paragraph 16C of Schedule 17 to the Act enables FOS Ltd to require licensees subject to the Consumer Credit Jurisdiction and any other respondents to a complaint to pay specified fees to it in respect of complaints closed by the Financial Ombudsman Service.

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.

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.

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).

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 annexto this chapter (FEES 5 Annex 1). A new annex will be prepared and consulted on for each financial year.