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annual review 2015/2016

1 April 2015 to 31 March 2016

investigation

In the section sorting things early on, we explain the range of ways we help to sort out problems at a very early stage. But some of the problems we see each year need investigating in more detail. This is generally because we need more information to resolve the issues involved - or because people’s positions are already entrenched.

total new complaints we needed to investigate

year ended
31 March
cases resolved
2016 340,899
2015 329,509
2014 512,167
2013 508,881
2012 264,375
2011 206,121

In 2015/2016 we investigated 340,899 new complaints - a 3.5% increase on the previous year. Since we were set up in 2000, people have referred a total of 3,128,550 complaints to us and payment protection insurance (PPI) accounts for half of these.

how complaints about PPI were brought to us

  %
complaints made on behalf of consumers by claims management companies 81.5
complaints made by consumers themselves 14.5
complaints made on behalf of consumers by professionals like lawyers and accountants 2
complaints made on behalf of consumers by free consumer advice agencies (eg Trading Standards and Citizens Advice) 1.5
complaints made on behalf of consumers by friends and family 0.5

how complaints about packaged bank accounts were brought to us

  %
complaints made on behalf of consumers by claims management companies 61.5
complaints made by consumers themselves 35
complaints made on behalf of consumers by professionals like lawyers and accountants 1.5
complaints made on behalf of consumers by free consumer advice agencies (eg Trading Standards and Citizens Advice) 1
complaints made on behalf of consumers by friends and family 1

In the areas of PPI and packaged accounts, we’re still seeing a significant proportion of complaints referred to us by commercial claims management companies.

Research for the Financial Conduct Authority (FCA) suggests that most people who decided to complain about PPI after being phoned by a claims manager went on to use a claims company.

We’ve continued to stress that people don’t need to use a claims manager to complain - but by the time a complaint is referred to us, people have usually already signed up with a claims company and agreed a contract appointing the claims manager as their representative.

As we explain in the section our insight and outreach, during the year we’ve continued to report examples of poor practice to the Claims Management Regulator (CMR). And following our frank conversations with claims managers themselves, they’ve decided not to pursue thousands of complaints - avoiding an unnecessary burden for us and for financial businesses, and meaning people who haven’t actually lost out didn’t have to wait months to be told that.

how complaints were brought to us - excluding PPI and packaged bank accounts

  %
complaints made by consumers themselves 82
complaints made on behalf of consumers by friends and family 7
complaints made on behalf of consumers by claims management companies 5
complaints made on behalf of consumers by free consumer advice agencies (eg Trading Standards and Citizens Advice) 4
complaints made on behalf of consumers by professionals like lawyers and accountants 2

In other areas, we continue to see very few complaints referred to us though claims managers. When complaints about PPI and packaged bank accounts are excluded, 82% of people contacted us themselves. A further 7% asked a friend or family member to complain for them - and only 5% chose to use a claims manager.

complaints from small businesses

This year 4,777 of the complaints referred to us came from small businesses - around 5% more than the previous year.

To use the ombudsman, small businesses must have an annual turnover of up to two million euros and should have fewer than ten employees (defined as a “micro-enterprise” under EU rules).

what small businesses complained to us about

  %
banking 69
insurance (excluding PPI) 18
investments 9
PPI 4

The proportion of complaints about different types of products remained broadly the same as the previous year. Within these categories, the problems we saw included:

  • 1,299 complaints about current accounts
  • 328 complaints about interest-rate hedging products
  • 219 complaints about commercial property insurance

As in previous years, we think the actual number of small businesses who’ve used our service is likely to be higher - because some small business owners choose to bring complaints to us in a personal capacity. Around one in ten consumers who complained to us are self-employed, whereas only around one in a hundred complaints are recorded as business disputes.

During the year we carried out research into the complaints we receive from small businesses - to better understand the issues causing disputes to be escalated to us. We highlighted the mismatch in expectations that can arise between small businesses and financial providers.

Our research also suggested that, in many cases, small businesses don’t have specialist support with financial and legal matters - and that their knowledge of financial services isn’t any greater than that of individual consumers. In ombudsman news in September 2015, we gave more details about what we found through our research - as well as our case handlers’ perspectives on resolving the problems small businesses bring to us.

the complaints we resolved

During the course of 2015/2016 we resolved a total of 438,802 complaints.

total complaints we resolved

year ended
31 March
cases resolved
2016 438,802
2015 448,387
2014 518,778
2013 223,229
2012 222,333
2011 164,899

Our role is to find an answer that’s fair and reasonable in the individual circumstances of each complaint - taking into account the relevant rules, laws and guidance, and good practice.

In practice, the types of information we’ll need in order to unpick the problem is likely to include both sides’ accounts of what’s happened, relevant paperwork, and records of conversations.

In nine in ten cases this year, we were able to resolve the complaint informally following our initial investigation. In the other 10% of cases, the people involved chose to pursue the complaint to the final stage of our process - asking for one of our ombudsmen to make a decision. Like last year, around a third of these requests were made by financial businesses and two thirds by consumers.

complaints decided by ombudsmen - at our final stage

year ended
31 March
cases resolved
2016 39,872
2015 43,185
2014 31,029
2013 24,332
2012 20,540
2011 17,465

Where either side isn’t happy with the outcome of our initial investigation, an ombudsman can review the complaint with completely fresh eyes - and make a final decision. In many of these cases, important information only comes to light at this late stage. Reflecting this, around one in six cases involved ombudsmen arriving at a different set of conclusions.

We know that financial businesses want reassurance that our ombudsmen’s decisions are consistent - to help them resolve their customers’ concerns in a consistently fair way. We’ve published all our final decisions since 2013 - and during the year the number of published decisions reached 100,000. This year we improved the accessibility of our online decisions database - to make sure people can find the answers they need as the number of published decisions continues to grow.

total ombudsman decisions - the types of problems they involved

  %
banking 26
PPI 25.5
general insurance (excluding PPI) 21.5
investments 9
consumer credit 7
mortgages 7
pensions 4

% of different types of problems settled by an ombudsman's decision

  %
pensions 30
investments 28
general insurance (excluding PPI) 24
consumer credit 21
mortgages 20
banking 11
PPI 4

As in previous years, we’ve seen proportionately more people ask for an ombudsman’s decision about problems with investments and pensions. Given the amount of money involved in these complaints - and the impact the outcome could have - it’s not surprising that people may want to take things as far as possible.

recording the outcome of complaints

We record and share the outcome of the complaints we look into each year - to help build a picture across different areas of financial services. The two possible outcomes we record - upheld or not upheld - each involve a wide range of fair, practical solutions and compromises we help people to reach.

Typically, we say a complaint is upheld if we decide that someone’s been treated unfairly by a financial business - and we tell the business to do something to put things right. We’ll also uphold a complaint if a business has already made someone an offer - but we decide that the offer isn’t fair, and tell the business to do something different to put things right.

On the other hand, if we decide a business hasn’t acted unfairly - or they’ve already made a fair offer to settle their customers’ complaint - we’ll record the complaint as
not upheld.

% of complaints we upheld

insurance

year ended 31 March 2013 2014 2015 2016
payment protection insurance (PPI) 65% 65% 62% 66%
motor insurance 47% 38% 35% 33%
buildings insurance 48% 44% 37% 38%
contents insurance 40% 39% 34% 33%
travel insurance 48% 53% 46% 48%
health insurance 29% 31% 32% 29%

banking and credit

year ended 31 March 2013 2014 2015 2016
current accounts (including packaged accounts) 34% 40% 36% 18%
credit cards 33% 30% 32% 30%
mortgages 26% 30% 33% 38%
unsecured loans 34% 35% 38% 31%
consumer credit 50% 48% 47% 48%
savings accounts 42% 41% 40% 35%
other banking services 42% 39% 45% 34%

investments and pensions

year ended 31 March 2013 2014 2015 2016
mortgage endowments 25% 28% 25% 22%
whole-of-life policies and savings endowments 23% 21% 22% 21%
investment bonds 36% 37% 33% 31%
pensions 34% 34% 31% 32%
stockbroking and portfolio management 49% 51% 45% 42%

While we upheld an average of 51% of complaints this year, the proportion continues to vary significantly depending on what the problem is about. For example, we upheld 66% of complaints about PPI, 21% about whole-of-life policies and just 14% about packaged bank accounts.

putting things right

If we uphold a complaint, we generally tell the business to put their customer in the position they would be in if they’d been treated fairly - or if a mistake hadn’t happened.

In practice, this could mean a wide range of things - and will depend on the individual circumstances of each complaint. We can tell a business to pay a specific amount of money up to £150,000. But very often, they’ll need to do something that doesn’t have a particular direct cash value - like amending someone’s credit file, or dealing with a claim that they’d originally rejected.

In 13% of complaints this year, we told the business to pay compensation to recognise the non-financial impact of their mistake - including the inconvenience, upset or other type of trouble they’d caused their customer.

how our ombudsmen told businesses to put things right

  %
telling a business to take action that doesn't have a direct cash value - for example, correcting a credit reference 24.5
redress up to £1,000 16.5
£1,001 to £25,000 15
£25,001 to £75,000 1.5
£75,001 to £150,000 0.5
more than £150,000 0.5
telling the business the basis or formula on which they should pay compensation - for example, where specialist calculations need to be made 41.5

The amounts in the table don’t include compensation we told businesses to pay for any non-financial impact their actions had on their customers.

Under our rules, we can decide not to look into a complaint if we believe it’s “frivolous” or “vexatious”. During the year we categorised a very small number of complaints this way - around 4% of cases overall. Of these, more than nine in ten involved PPI.

From experience, we know people aren’t always sure how to articulate what they’re unhappy about - for example, because they’re upset or confused about what’s happened. So a concern which, on the face of it, seems unfocused or frivolous may turn out to be a more serious issue that needs addressing. As we explain in the section the types of problems we’ve seen, we’ve continued to stress the importance of clear, open communication in preventing and resolving complaints.

hearings

Under our rules, we have the option to hold a face to face hearing if we decide we can’t give a fair answer to a complaint without one.

We were specifically set up as an informal alternative to the court system. And we don’t think it’s helpful or efficient to hold a meeting just so people can confront each other - which we know many people would find intimidating.

There are a range of options for talking to us - and we give people the chance to respond to what the other side has to say. So it’s very rare that we can’t get the facts and opinions we need in other ways, without having to bring the business and their customer together in person.

how quickly we resolved complaints

year ended 31 March % resolved within three months % resolved within six months % resolved within nine months % resolved
within twelve months
2016 excluding PPI complaints 66 86 92 96
2016 all cases 38 53 62 69
2015 excluding PPI complaints 53 78 86 90
2015 all cases 23 39 48 57
2014 excluding PPI complaints 44 71 84 90
2014 all cases 25 48 67 78
2013 excluding PPI complaints 43 73 84 89
2013 all cases 30 58 72 81

PPI complaints waiting to be resolved at 31 March 2016

  %
waiting less than six months 33
waiting between six months and a year 20.5
waiting between a year and two years 26.5
waiting over two years 20

% of complaints resolved within three months - by product area

  %
payday loans 85
credit cards 80
consumer credit 79
current accounts 79
credit broking 78
motor insurance 75
mortgages 65
investments and pensions 51
PPI 18

During the year we continued to see significant variation in the length of time it takes us to resolve complaints about different products and services.

In particular, the ongoing impact of the Supreme Court’s judgment in the case of Plevin v Paragon Personal Finance -involving the level of commission on a PPI policy - meant that we haven’t been able to progress a significant proportion of PPI complaints as quickly as we’d hoped. There’s more about the issues involved in PPI complaints in the section the types of problems we’ve seen.

In July 2015 the EU directive on alternative dispute resolution came into force. As an official provider of alternative dispute resolution, we’ve been working towards the standards set in the directive - including giving our answer to complaints within 90 days. Across all types of complaints, we resolved proportionately more complaints within three months than in the previous year.

developing our service

Over the last few years, new technology has significantly increased people’s expectations of the businesses and services they use. Recognising this, we’ve continued to invest in building a convenient, modern service that answers the problems people bring to us as quickly and informally as possible.

Following trials in the previous year, during 2015/2016 we’ve extended our new ways of working to a greater number of areas. This has involved working flexibly with businesses - sharing information more quickly, and together challenging red tape and operational barriers to moving things forward. As we explain in the section our insight and outreach, we’ve strengthened our front-line relationships with businesses this year - helping us to identify and overcome potential issues more quickly and effectively.

Where we’ve been working differently, we’ve seen significant improvements in the time it takes to resolve problems. And a larger proportion of people - at businesses, as well as consumers themselves - are satisfied with their experience, regardless of the outcome of the complaint.

We’ve been keeping people up to date about what these developments mean for us and our customers in ombudsman news- and in our regular conversations with our stakeholders.

In the section sorting things early on, we highlight how we’ve developed our range of online services - including improving the problem-solving tools on our mobile-friendly website, and engaging with people through social media.

our knowledge and expertise

There’s considerable uncertainty around the number and nature of complaints we’ll be called on to resolve in the future. To ensure we’re ready to respond efficiently - whatever problems people bring to us - we’ve continued to invest in our capability and capacity to handle a breadth of complaints.

We take a practical, on-the-job approach to growing knowledge within our service. In total we ran more than 1,300 internal training events this year - including coaching and mentoring by ombudsmen and experienced case handlers, and a range of instant e-learning resources.

We’ve also continued to support our people to gain relevant industry-recognised qualifications. During 2015/2016 this involved nearly 700 qualifications - accredited by professional bodies including the Chartered Banker Institute, the Chartered Insurance Institute, the Chartered Institute of Securities and Investment, and the International Compliance Association.

After trials last year, all our case handlers are now using our new knowledge platform. This online tool helps people to quickly find and share knowledge that’s relevant to the problem they’re resolving - whether it relates to an issue we see regularly, or a trend we’ve identified more recently.

And to make sure we continue to identify and respond to patterns in problems we’re seeing, we’ve reviewed our framework for sharing knowledge and insight - as well as building on our horizon-scanning work.

our ombudsmen's knowledge and experience

During the year we’ve continued to strengthen our ombudsmen’s role at the heart of our service - ensuring that their knowledge is being applied by everyone at the earliest possible stage.

We want our ombudsmen’s backgrounds and experience to reflect the range of lives and livelihoods of the people involved in the complaints we decide. As well as legal or financial services, our ombudsmen come to us from a range of other professions - including teaching, local government and the voluntary sector.

As we’ve highlighted in the section who complained to us, more than half our ombudsmen are women. There’s more detailed information on our website about each individual ombudsman’s experience.

  • charity and third sector
  • human resources
  • local government
  • personal banking
  • solicitors and barristers
  • mortgage broking
  • district judges
  • teaching
  • trading standards
  • underwriters
  • appeals services
  • police and security services

listening and improving

Each year we gather feedback and views in a range of ways to ensure we’re providing the best possible service - keeping fairness at the heart of what we do. In 2015/2016 this included:

  • Running regular surveys to find out and monitor how consumers and businesses rate different aspects of our service - making sure that people feel we’ve listened to them and cared about what they have to say, that we’ve got to grips with their problem and used common sense, and that we’ve given clear and honest answers and let them know where they stand.
  • Increasing our use of instant feedback tools - giving people the chance to tell us how we’ve done immediately after talking to us, and phoning them straight back if they’re unhappy.
  • Running focus groups to hear our customers’ views face to face.
  • Using feedback we’ve received about our service - and working closely with our independent assessor - to improve our response to people’s concerns and to prevent problems arising.
  • Collecting insight about people’s experience of our online services, as well as other support such as ombudsman news.
  • Meeting regularly with businesses to work through operational challenges - as we’ve continued to improve the efficiency and flexibility of our own processes.
  • Asking people across the ombudsman - including senior leaders and our board - to regularly review our handling of cases, and challenge where they feel our service could have been better.
  • Sharing ideas about improving customer service - and monitoring how proud our people say they are of how they’ve helped individual customers with their problems.
  • Monitoring awareness of the ombudsman and attitudes towards resolving problems - to help us make sure that we’re remaining relevant and accessible to everyone who needs us. There’s more about this research in the section who complained to us.

learning from complaints about us

It’s understandable that someone’s feelings about the answer we’ve given to their complaint may have a bearing on how they feel about their experience of our service as a whole. But we want people to feel they’ve been treated fairly whatever the outcome - so during the year we’ve continued to learn from complaints people have made about our customer service.

Over the course of the year we received and responded to 2,202 complaints about our service - 20% fewer than last year. We resolved 46% of these straightaway - and in 35%, a senior manager put things right. We generally receive fewer complaints from businesses than from consumers or their representatives. This year around 2% of complaints about our service were from businesses - compared with 3% last year.

In 36% of complaints about our service, we agreed that the level of service we had provided wasn’t good enough - for example, because people had been inconvenienced by avoidable delays or administrative mistakes on our part. Where we decided it was appropriate to recognise the impact of these mistakes with compensation, we paid an average of £200.

If someone isn’t happy with a senior manager’s response, they can refer their concerns to the independent assessor for a formal review of the customer service we’ve provided. This happened in 35% of the complaints that senior managers dealt with this year - down from 39% last year.

The independent assessor, Amerdeep Somal - who is appointed by our non-executive board - can recommend we take action to make sure any problems she’s identified don’t arise again. She reports to our board each year on the findings and re commendations she’s made - and we publish her report in full on our website.

  • Collecting insight about people’s experience of our online services, as well as other support such as ombudsman news.