We are pleased to be invited to comment on these proposals. While we welcome the 22% drop in specific budgeted costs for deposits, we are concerned by the overall increase in the proposed management expenses budget for 2017/18 of £1.847 million (2.74%) over last year. This, we are told, is due to the increased outsourced claims handling costs caused by projected higher volumes of complex claims. Missing from the MELL proposals are concrete plans to reduce these increased costs.
The continuing lack of detail about the “strategic change portfolio” is a concern. But we are pleased to note that 2017/ 18’s budget of £9 million is £1million less than the previous year’s budget. The MELL proposals says that £4.4 million of 2017/ 18's budget is allocated to regular maintenance and upgrades and £4.6 million to specific projects. There is little other detail on what it is spent on, however. How much is on software, hardware, consultancy fees etc? Have IT systems been bought and not used? We are referred to the separate plan and budget document for information on the portfolio but that is vague in places.
The 2015/ 16 MELL paper said that FSCS was entering the third year of a five-year change programme. But in both 2012/ 13 and again in 2013/ 14 £6.3 million was budgeted for re-engineering processes. Furthermore, in 2010/ 11, expenditure on IT systems totalled £18 million. Curiously, there is no mention in the 2017/ 18 MELL consultation of the five-year change programme although the plan and budget document says the FSCS is more than halfway through its five-year strategy.
With such a long and expensive history of expenditure on strategic change, we were disappointed the FSCS forecasts only £0.4 million this year of efficiency savings from improved processes. Within three to four years, the FSCS expects annual savings on like-for-like claim volumes to total approximately £5 million as a result of the recent investment. A definition of “recent” and information on how the £5 million saving is going to be achieved and measured would be helpful.
Finally, the FSCS has indicated that there may be reprioritisation within the strategic change portfolio during the course of the year. Once again, some explanation on how changing priorities are identified, challenged and actioned would have been useful.