This is the first plan & budget I have introduced, although it is now the fourth year we have consulted publicly on our workload and financial forecasts.
Last year’s consultation provided feedback on emerging complaint patterns that helped us revise our initial estimates. However, even after increasing our workload assumptions, we expect actual complaint numbers for 2003/04 to be over 60% higher than we forecast in the budget for 2003/04, and 58% higher than in the previous year. Coping with this level of demand has prompted us to innovate - adopting new strategies to enable us to manage the increased workload without compromising quality and consistency in decision-making. During 2004/05, we plan to build further on initiatives already introduced, including new case-handling procedures, greater flexibility in managing caseloads and the recruitment of additional staff. We will also continue to seek ways of moving and reallocating staff resources, quickly and efficiently, to areas of high demand.
Our planning assumption for 2004/05 is that the current high level of mortgage endowment complaints (around 37,000 complaints in the first nine months of 2003/04) will fall - initially to 35,000 in 2004/05 and then to 15,000 in 2005/06. These figures may well need to be adjusted in the light of experience and we will particularly welcome feedback based on industry intelligence in this area.
The widening of our jurisdiction will bring us new challenges of size and diversity to add to the continuing challenge of complaint numbers. Mortgage and insurance intermediaries will join our compulsory jurisdiction in October 2004 and January 2005 respectively. This will add an estimated 20,000 to the number of firms covered by the ombudsman service - giving us jurisdiction over more than 30,000 firms in total. We are not predicting a significant growth in complaint load as a result. However, as so many smaller firms will be joining our compulsory jurisdiction, we have been particularly keen to find funding mechanisms that meet their particular needs, without unfairly affecting the firms we already cover. We note, too, that the Department of Trade and Industry’s recent White Paper on consumer credit included proposals for an alternative dispute resolution service, for which a scheme such as ours may be considered appropriate.
Our board has given much thought this year to how the service will maintain its values of independence, balance and integrity as it grows in size and complexity. We have been listening to - and learning from - our stakeholders’ expectations, and we are keen to ensure the service is responsive to our users’ needs. This commitment forms the basis of our response to HM Treasury’s review of the Financial Services and Markets Act 2000 (the so-called “N2+2 review”). The Treasury has asked us to work together with the Financial Services Authority (FSA) in reviewing a wide range of stakeholder concerns, including the way in which issues with wider implications are managed between the ombudsman service and the FSA, and the issue of appeals. A group of expert stakeholders - drawn from consumer and industry backgrounds - was appointed in December 2003. It will oversee the scope, terms and conduct of the consultation process for the review, leading to a full public consultation exercise early in 2004.
We have already consulted with the FSA on the broad outline of this plan & budget and we will report back to it on the outcome of this consultation in March 2004, when we will also seek our final budgetary approval. Before then, we welcome your views to help us finalise our plans.