You mentioned in the last ombudsman news that you'd dealt with your 300,000th payment protection insurance (PPI) case. What are you doing to manage this workload effectively?
The challenges of our PPI workload are unprecedented. The number of new complaints about mis-sold PPI that we are assuming we will receive in 2012/2013 - 165,000 - will account for around 60% of our new cases next year. But we could receive a significantly higher or lower number than this - and there is considerable uncertainty about the volume of these cases in future years.
Initial feedback from stakeholders suggests that most believe we will continue to receive substantial volumes of PPI complaints for another two or three years. This seems a sensible basis on which to plan, given the size of the PPI market (with up to 6.5 million policies bought annually), the number of PPI complaints (1 million) made direct to banks and other financial businesses last year alone, and the potential extent of detriment to consumers.
Having to gear up to manage a workload on this scale means that the costs we incur in handling PPI cases will be significantly higher than the cost of handling other cases. We do not think it would be fair for these higher - PPI-related - costs to be met by businesses not involved in mass PPI claims. This is why we are proposing a supplementary case fee of £350 (in addition to the standard case fee of £500) for each PPI mis-selling case that is referred to us. But the fee will be chargeable only when businesses have more than 25 of these cases a year, reflecting where the costs are actually incurred in sorting out PPI mis-selling.
We are currently consulting on these proposals - and on how we plan to manage and fund the record complaints workload we expect next year. We look forward to hearing your views and feedback.
In your interview with Sir Christopher Kelly (issue 98 - November/December 2011) you said he was stepping down as chairman of the ombudsman service. Has his successor been named yet?
Yes, Sir Nicholas Montagu KCB has been appointed as the chairman of our non-executive board of directors, to succeed Sir Christopher Kelly KCB - when he steps down as chairman in January 2012, after seven years.
Sir Nicholas is the former chairman of the Board of Inland Revenue, with over twenty years as a senior civil servant working on issues ranging from pensions to public service reform.
The appointment was made by the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000 - with the approval of HM Treasury - and it followed a recruitment exercise earlier in the year, including advertising in the press.
Our board has strategic responsibility for running the ombudsman service - ensuring the organisation is properly resourced and able to carry out its work effectively, impartially and independently.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
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