skip tocontent

the independent assessor's annual report for 2007/08

by Michael Barnes CBE to the board of the Financial Ombudsman Service

The independent assessor's role is to carry out a final review of the level of service provided by the Financial Ombudsman Service, in cases where a user of our service has already referred a complaint to our service review team for investigation but remains dissatisfied.

Under his terms of reference, the independent assessor can consider complaints about our level of service, our procedures and the behaviour of our staff. His remit does not cover disagreements about the actual merits of decisions. The independent assessor is authorised to make findings and recommendations for redress in cases where he believes it is justified.

During the year ended 31 March 2008, a total of 281 cases were referred to me, compared with 326 in the 2006/2007 financial year - a reduction probably explained by the decline in the number of mortgage endowment complaints that the Financial Ombudsman Service was having to deal with during the year.

The number of complaints referred to me that required a full investigation and review of the file was 170 - of which I upheld 80, either wholly or in part, a slightly higher proportion than in the previous year. In all but three of the complaints I upheld, I made recommendations for financial compensation.

The amounts of compensation that I recommended ranged from £50 to £600, with most awards falling between £250 and £450. In about a third of the complaints that I upheld, the service review team at the ombudsman service had already offered apologies and/or some compensation - but not enough, in my view, to provide sufficient redress.

Nineteen of the cases referred to me during the year were awaiting my investigation as at 31 March 2008. Of the cases which did not require investigation, 53 were referred to me too early in the process (ie before the service review team had been given the opportunity to deal with the complaint); 28 were general enquiries; 9 were outside my remit because they were "out of time" or unrelated to the ombudsman service; and 2 cases were withdrawn by the person complaining.

Delay continues to be the most frequent reason for complaints - often involving cases that have been passed from one adjudicator to another for operational reasons. In my view, this is something which casework managers need to keep under review. Delay is particularly unfortunate where a complaint has been with the ombudsman service for several months -and when the case then comes to be considered, it emerges that it is outside the ombudsman's jurisdiction for reasons that should have been apparent at an earlier stage.

It is also important that any correspondence sent in, while a case is awaiting allocation to an adjudicator, should be carefully monitored. In one case, an offer sent by the business to the consumer via the ombudsman service remained on file for several months before the consumer was made aware of it.

Unfair treatment is another frequently-cited cause for complaint - often in situations where the real focus of the consumer's or business's concerns is simply that they disagree with the ombudsman's decision. That, of course, is something which my terms of reference exclude me from questioning, unless there appears to be some procedural irregularity in the way a decision has been arrived at. Poor service of one kind or another - often a failure to keep the parties involved updated on progress - also comes high on the list of causes for complaint.

For obvious reasons, it is important that adjudicators not only deal even-handedly with both parties to the complaint, but are also seen to have done so. During the year I have noticed that when adjudicators are minded to uphold a complaint in the consumer's favour, they usually present this to the business involved as their "view" of what the outcome should be. On the other hand, when they consider that the complaint should not be upheld, adjudicators frequently convey this to the consumer as their "assessment" - which to my mind has a more formal ring to it.

I understand that the term used internally by the ombudsman service to describe both these situations is "initial view". It therefore seems to me to be good practice that the term used internally should also be used externally - in letters both to businesses and consumers. People's perceptions are important in these matters, and if it is a "view" when put to the business but an "assessment" when put to the consumer, the former may be seen as in some way being more negotiable than the latter.

Another matter that has given me pause for thought during the year is the attention paid to guidance that the ombudsman service issues from time to time. For example, the ombudsman service has issued guidance on awards for non-financial detriment such as distress and inconvenience. This is relevant in the context of complaints I receive from consumers unhappy that awards made in their favour are very low.

Three levels of awards are quoted in the guidance - modest awards (less than £300), significant awards (£300 to £1,000), and exceptional awards (over £1,000). In the cases that I see where awards for distress and inconvenience are made against businesses, they are almost always in the modest bracket. The amount of awards made is clearly a matter for the judgement of adjudicators and ombudsmen - but I suggest that they should be reminded of the situations quoted in the guidance where significant or even exceptional awards might be justified.

As in previous years, only a small number of complaints were referred to me by businesses - 13 in total. Nearly all of these came from independent financial advisers (IFAs) or brokers. Most involved the levying of case fees, where the business concerned felt that the complaint was trivial or outside the time limits - and so should, in their view, have been dismissed early on in the process without "triggering" a case fee. The rules governing time limits, particularly in mortgage endowment cases, are both highly detailed and very specific. It is therefore only rarely that I consider that the business has grounds for complaint in this regard.

One change during the year has been the emergence of insurance as the sector producing the largest number of complaints referred to me about the way cases have been handled. Legal expenses, income protection, and buildings and contents claims all figured prominently - and clearly give rise to highly emotive feelings as far as consumers are concerned. They are also matters where ombudsmen often have to reach difficult decisions - on issues such as disability or long-term illness - which clearly have far-reaching effects on people's lives.

Finally, I must issue my customary warning that the cases referred to me represent only a tiny fraction of the ombudsman service's overall caseload. The matters to which I have drawn attention in this report are therefore based on a small number of isolated examples. Nevertheless, they can help to point the way towards improvements in service and procedure - and I am grateful to the service review manager and his colleagues at the Financial Ombudsman Service for their readiness to pass on my findings to adjudicators and ombudsmen, where it is appropriate that they should do so.

Michael Barnes CBE
April 2008

The independent assessor, Michael Barnes, presented this report to the board of the Financial Ombudsman Service at its meeting on 9 April 2008. The board accepted the report and its recommendations in full.