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Last Updated: Friday, 21 September 2007, 10:46 GMT 11:46 UK
Financial ombudsman to cut staff
FOS leaflet on disputes
The number of cases FOS staff handle has dropped dramatically
The Financial Ombudsman Service (FOS) has announced plans to axe more than a quarter of its staff.

Forecasts that the London-based body's caseload will fall significantly next year had prompted it to cut up to 260 staff from its 860-strong workforce.

"We are not processing the hundreds of thousands of endowment mortgage disputes since 2005," said a spokesman.

The organisation resolves disputes between financial services firms and customers, and can award compensation.

In the past four years the FOS has dealt with about a third of a million complaints about the way in which financial companies have handled claims for compensation for mis-selling mortgage endowment policies.

They reached a peak of 70,000 complaints in 2005, but have since fallen off - particularly in the past few months with fewer than 30,000 expected this year.

The process seems to be coming to a natural end because the Financial Services Authority (FSA) and the industry has been flushing out the last remaining claims.

Red letters

Over the past few years the regulator has told firms that they must send their customers "red letters", giving them a three year deadline for lodging any claim for compensation.

The FOS had assumed that this would generate more complaints, from people unhappy that they had been given such a deadline at all.

However a fresh flood of complaints has not materialised.

"There have been fewer than expected complaints about being time barred," said an FOS spokesman.

"So we are going to align the number of cases with our resources," he added.

Formal consultation with the FOS staff council will start soon, but the group has said it hopes to make all the job cuts through voluntary redundancy.


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