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

1. The Financial Ombudsman Service…..its role in complaint resolution Ian Woodman Relationship Manager CILA – 29 October 2007

2. 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

3. 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

4. FEES chapter 5 funding arrangements FSA handbook chapter 1 treating complainants fairly (complaints-handling rules for businesses) chapter 2 jurisdiction of the ombudsman chapter 3 the ombudsman complaint-handling process chapter 4the voluntary jurisdiction Dispute Resolution: Complaints (DISP)

5. 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

6. what businesses have to do… complaint-handling rules … complaint not resolved by the following day prompt written acknowledgement keep complainant reasonably informed if complaint sent to wrong business, it may forward it – promptly – to correct business & tell complainant in a final response 8 week stagefinal response &/or referral rights

7. 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

8. 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)

9. 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

10. 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

11. our process … 1 3 stages customer contact team 2 adjudicators 3 ombudsman

12. phone enquiries 341,455 written enquiries 286,359 totalenquiries 627,814 customer contact team to firm for resolution jurisdiction checks early resolution enquiries converted to cases 94,392 to casework figures for year to 31 March 2007

13. our process … 2 adjudicators 94% of closed cases resolved by adjudicators • through: • mediation • guided conciliation • formal adjudication 111,673 cases resolved in year ending 31/03/07 unable to resolve 8% of cases passed to an ombudsman for final decision

14. 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

15. 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

16. 3 ombudsman – final decision ombudsman considers case afresh will hold hearing if necessary (v rare) cases adjudicator cannot resolve ombudsman agrees with adjudicator conclusions final decision or ombudsman does not agree return for further investigation issue provisional decision

17. 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

18. 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

19. 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

20. general insurance complaints by product

21. 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

22. 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

23. resources available - our website • 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

24. resources available - firms only … technical advice desk - informal guidance on our practice and procedures 020 7964 1400 technical.advice@financial-ombudsman.org.uk

25. any questions now or later?