The cost of handling complaints about insurers has fallen by almost 10%, according to the Financial Ombudsman Service.

The ombudsman, which has taken control of all financial complaints schemes since last year, reported that the unit cost of handling complaints fell from £753 in 2000/01 to £684 in 2001/02.

In its latest report, "Plan and Budget", the ombudsman reported its costs are expected to fall further to under £560 this year and in 2003/04.

An ombudsman spokesman said: "This will mean a reduction in the annual levy paid by financial services firms. The levy that helps fund the ombudsman service will be on average 24% lower than last year."

The fall in the number of complaints was due to increased productivity, it said.

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