© May not be reproduced without permission of Financial Ombudsman Service Ltd 1 The Financial...

© May not be reproduced without permission of Financial Ombudsman Service Ltd 1

The Financial Ombudsman Service…..its role in complaint resolution

Ian Woodman

Relationship Manager

CILA – 29 October 2007


Financial Services Authority (the regulator)

Financial Ombudsman Service (adjudicates on unresolved disputes)

Financial Services Compensation Scheme(pays compensation if authorised firm is unable to pay claims against it)

background …

Financial Services andMarkets Act 2000


the role of the Financial Ombudsman Service

an independent service for resolving disputes between consumers and financial firms

to achieve a fair and reasonable outcome at the earliest possible opportunity

promotes dispute avoidance

can save time and expense of costly litigation

increases consumer confidence


FSA handbook

FEESchapter 5 funding arrangements

Dispute Resolution: Complaints (DISP)

chapter 1 treating complainants fairly (complaints-handling rules for businesses)

chapter 2 jurisdiction of the ombudsman

chapter 3 the ombudsman complaint-handling process

chapter 4 the voluntary jurisdiction


complaint-handling rules

a business must:

have effective and transparent procedures for reasonable and prompt complaints handling

investigate complaints impartially

publish summary details of its complaints-handling process eg in a leaflet or the contract docs

summary details should explain that unresolved complaints may be referred to the Financial Ombudsman Service


complaint not resolved by the following day

promptwritten

acknowledgement

keep complainant reasonably informed

8 week stage final response

&/or referral rights

complaint-handling rules …

if complaint sent to wrong business, it may forward it – promptly – to correct business & tell complainant in a final response

what businesses have to do…


a final response …

is the business’s full response to the complaint

it should be in writing

it should set out its final view on the issue/the outcome of its investigation

give details of any offer and an explanation of how it arrived at the offer or its reasons for rejecting the complaint

must include ombudsman referral rights and leaflet


what is an ombudsman complaint?

any expression of dissatisfaction (oral or written – justified or not)

involves an allegation that the complainant has suffered, or may suffer, financial loss, material distress or material inconvenience

(…that is not resolved by close of business on the business day following receipt)


ombudsman’s remit

fair and reasonable, taking into account…

relevant law

regulations

regulators’ rules, guidance and standards

relevant codes of practice

good industry practice

…at the relevant time


gathering the evidence

inquisitorial remit

consumers might need our help

complaint form completed by consumer

we will get to the crux of the dispute and will ask either side all the questions we need to

ample opportunity for both sides to submit their case

we read and listen very carefully


3 stages

our process …

customer contact team1

adjudicators2

3ombudsman


totalenquiries 627,814

enquiries converted to cases 94,392

to casework

to firm for resolution

early resolution

phone enquiries

341,455

customer contact team

jurisdiction checks

written enquiries 286,359

figures for year to 31 March 2007


our process …

adjudicators2

94% of closed casesresolved by adjudicators

unable to resolve 8% of cases

through:• mediation• guided conciliation• formal adjudication

passed to an ombudsman for final decision

111,673 cases

resolved in year ending

31/03/07


adjudicating

a formal decision might not be needed – a fresh pair of eyes can make a difference

can we mediate a settlement – maybe help both sides to see things in a new light?

experienced, fair minded adjudicators

where a more formal approach is needed the adjudicator will recommend a way forward – but tells the losing side first

ample opportunity to discuss or challenge


adjudicating

fair and reasonable outcome for each case

can look beyond strict legal position – discreet use

will use expert, independent evidence if needed

documentation or call recordings important

balance of probabilities where uncertainty exists

both firm and consumer can appeal to the ombudsman

…although less than 10% go to the ombudsman


ombudsman considers

case afresh

final decision

cases

adjudicatorcannot

resolve

ombudsman – final decision3

ombudsman agrees with adjudicator

conclusions

ombudsmandoes not agree

return for further investigation

issue provisional decision

will hold hearingif necessary

(v rare)

or


ombudsman decisions only necessary if parties do not accept adjudicator’s view

the final stage in the ombudsman service process

based on review of papers by a single ombudsman

no appeal to another ombudsman

final and legally binding if complainant accepts

complainant retains legal rights if rejects FD

judicial review – entitled but very rare

individual case decision but recognise desire for consistency


redress

financial loss

distress, inconvenience, injury or damage to reputation

costs only in exceptional circumstances

£100,000 limit

recommendation above £100,000 not binding

ombudsman can instruct a firm to take ‘appropriate’ action


briefly, what we are seeing…..

substantial drop in disputes about the sale of mortgage endowment policies compared to last year

welcome reduction in critical illness & PHI complaints

complaints about the sale of PPI increasing steadily over last 6 months

upward curve in motor complaints continued

buildings and contents numbers fairly stable….so far

no trends or spikes to report on property complaints


type of complaint 2007 2006 2005

motor 4,230 3,372 2,571

building 1,951 1,951 1,624

travel 1,670 1,787 1,525

contents 1,238 1,224 1,145

income protection 891 1,103 980

loan protection 1,832 1,315 833

critical illness 680 799 717

other 3,238 2,719 2,089

total 15,730 14,270 11,484

general insurance complaints by product


the value of loss adjusters

a crucial role

usually first on scene

early intervention and management is critical

communication is key

good, detailed reports are invaluable to us

some of the most ‘messy’ complaints could have been avoided with the early involvement of an adjuster


but a note of caution…

sometimes it looks like you are just trying to cut costs

remember ‘good faith’ works both ways

the policyholder should be paid what they are due

make a fair offer first time – don’t ‘haggle’

we are looking for objectivity at all times

detail, accuracy and evidence is crucial

your reports carry huge weight for us


www.financial-ombudsman.org.uk

news

frequently asked questions

printable complaint form

all our publications including case studies

special needs information

subscribe to receive regular news and updates by e-mail

resources available - our website


resources available - firms only …

technical advice desk - informal guidance on our practice and procedures

[email protected]

020 7964 1400


any questions now or later?

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