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annual review 2012/2013

1 April 2012 to 31 March 2013

chief ombudsman's report

As the chairman comments in his foreword, this has been a year of unprecedented challenges for the ombudsman service. As well as receiving substantially higher volumes of cases than anyone forecast, we have found our caseload increasingly volatile - with a higher proportion of more complex disputes being referred to us by consumers.

The difficult economic climate - combined with dwindling public trust in "institutions" generally - certainly lies behind many of the challenges we see. When someone's finances are stretched, they are more likely to complain when something goes wrong. And they are more likely to pursue that complaint if they don't fully trust that their complaint has been handled properly.

Of course, businesses too are affected by the challenging economic times. We have noticed a higher proportion of cases where the positions on both sides are more deeply entrenched. This affects our ability to resolve cases as quickly as we - and the parties involved - would want.

I should emphasise that the exceptionally high demand for our services was not just down to the number of complaints about payment protection insurance (PPI) more than doubling. We have seen higher numbers of complaints across the range of products and services that we cover.

In 2011 we set out five priorities for developing our service. These are the principles that continue to focus us on what really matters. I find them a useful framework for reflecting on our performance over the year.

delivering a trusted, fair and easy to use service - for everyone

Retaining our customers' trust has never been more important to us. By the time a consumer reaches us, they have already raised a complaint directly with a financial business and have had that complaint rejected.

So it is crucial that consumers trust us to be fair and impartial in the way we handle and resolve their dispute. I was particularly pleased to see that our customer research has shown that when someone had experienced our service at first hand, their level of trust in us quadrupled. Results like this do not make us complacent. We can always improve - and we will continue to work hard to retain our customers' trust.

Of course, it is equally important that the businesses involved in disputes trust us to deal fairly with complaints that have been made against them. This trust has to be based on capability and credibility - on what we know, how we apply our knowledge, and on how we behave. I talk about this in more detail under the "knowledge" priority below.

Making sure we are accessible isn't just a box-ticking exercise or a "nice to do". It is essential to making sure that people know we are here when they need us - particularly in tough economic times. We have continued to develop partnerships with frontline advice agencies across the UK - and have worked collaboratively with consumer groups to make our service easier to use. Perhaps because of our work in this area, we saw increasing demand for our services from consumers who told us they were unemployed.

Understanding more about the consumers who come to us - their age, occupational background, attitudes and behaviour - helps us develop our services to meet different people's needs. This year, the proportions of people from different socio-economic backgrounds who came to us remained broadly consistent with last year. But we did notice a shift in the age profile of the consumers who came to us.

The proportion of consumers over 65 who referred complaints to us increased by 20% during the year - and people in this age group now account for almost a quarter of the people who use our service. In contrast, the number of young consumers who refer complaints to us is proportionately lower than in the UK as a whole.

These groups of consumers have different needs and expectations. Over half the people aged over 65 who we surveyed said they didn't have internet access. We need to make sure we continue to take that into account in the way we develop our service. The inevitable drive towards online and digital also needs to be tempered by what younger consumers have told us - that despite their extensive use of social media, they are more likely to have found out about us through friends, family or colleagues - and would like our presence on social media to be relatively "light touch".

We use this information - and a lot more besides - to make sure we are reaching out effectively and meaningfully to the people who need our services.

sharing our insight and experience - to help prevent future problems

Our work in resolving disputes has significantly more impact if the lessons learned are fed back to the financial services industry to help prevent future problems. We have continued to publish information about our approach to settling disputes in our regular newsletter, ombudsman news. We have also expanded the technical resource on our website to give more information about our approach to different products, services and situations.

In April 2013 we started the process of making the decisions of our ombudsmen publicly available on our website. Following public consultation in 2011, we refined our approach over the year to make sure that the publication of decisions happens smoothly and efficiently - and that it has a positive effect on everyone with an interest in our work.

We have also spent a lot of time working with financial businesses to help them learn from what we see in the complaints consumers bring us. Just ten financial services groups account for three quarters of the complaints we receive. We have invested most time with these groups during the year - working with frontline complaints-handling teams in financial businesses, or engaging strategically with their senior management.

We have also worked hard to reach out to smaller businesses across the country. Our outreach team has made its way from Belfast to Exeter via Cardiff and Glasgow - calling at many other places along the way. Through our events, the information we publish and our technical advice desk for businesses and advice workers, we have spoken to thousands of businesses and consumer advisers across the UK. We hope we have helped prevent a lot of problems from ever reaching us.

We have continued to work closely with other statutory bodies where our work overlaps. During the past year this included liaising with the FSA and the OFT through the formal "co-ordination committee" - which helps our three bodies to identify emerging conduct risk issues and work together to resolve them quickly. We also worked with the FSA to establish a similarly effective working relationship with the new Financial Conduct Authority (FCA), which officially came into being on 1 April 2013.

putting knowledge and expertise at the heart of everything we do

Our main job - making decisions on individual disputes - is an "intellectual" one. This means that our people are by far our most important resource. We rely on their skills, expertise, intellect and professionalism to determine the outcome of cases in ways that are, and are seen to be, fair and reasonable in the unique circumstances of each case.

Our ombudsmen are our professional leaders. They set the tone for the work we do and they determine our approach to the different types of disputes we see. This year we have increased the number of our ombudsmen significantly and invested heavily in their development - to enhance their role as the professional leaders of our organisation.

We have also strengthened our career structure, enhanced the development programme for our managers and introduced new ways of sharing knowledge "on the job" - through blogs and forums. By doing this, we will continue to ensure that quality and consistency remain at the heart of our work, as we face the challenges of a caseload that continues to grow and change significantly.

Investing in professional leadership and career development also means that people are more likely to choose to develop their careers with us. This has helped to reduce the "turnover rate" among our staff - despite the increasing attractiveness of our people in a sector where experienced complaints-handlers are at a premium.

Maintaining continuity in our people also helps ensure consistent outcomes on similar issues. This consistency can help businesses improve their complaints handling, as well as delivering fair outcomes for consumers and businesses alike.

But professionalism is about more than technical knowledge - especially when our people are dealing with lives, livelihoods and reputations. We think it's important to show both professionalism and compassion. That is why we are so driven by our values - and we have continued to recruit, assess and reward our people against these values.

I was delighted that this year we were ranked at number 25 in the Sunday Times Best Companies survey for not-for-profit companies. Given the responsibilities we have to our customers - and the changes we are going through - high levels of staff engagement, together with a commitment to growing and developing our knowledge and experience, are crucial to our success in the future.

I said in last year's annual review that this is a remarkable place to work. This is a close-knit community, and we were deeply saddened this year by the death of two long-serving members of staff, Steve Bint and David Gray. Colleagues described Steve to me as "the most positive person I've ever met" and David as "someone who gave without being asked". They made a huge difference to everyone they worked with, and they are missed.

being flexible, reliable and effective

We are committed to reducing the time it takes to resolve cases. But the challenge is more complex than "just" managing significant increases in demand. We are seeing fewer "straightforward" cases that we can resolve promptly - as well as a corresponding rise in the number of more complex cases, and more cases being harder fought by consumers and businesses.

To deal with these challenges we have been looking at new ways of doing things. We have run innovative projects to test out new ways of resolving certain disputes - to sort out people's problems as quickly as possible without using the more formal aspects of dispute resolution - while maintaining our high standards of fairness and impartiality.

During the year this involved our working with a number of financial businesses to find new ways of dealing with complaints about e-money and money transfer. By working differently, we were able to resolve many of the problems consumers brought us in days rather than weeks.

But technology does not always work in consumers' favour - especially when things go wrong. In the summer of 2012 computer problems across the RBS group led to a surge of complaints from consumers who found that they couldn't use their bank accounts. We worked quickly with RBS to agree a new, streamlined approach to handling problems that consumers brought to the ombudsman.

Meeting the demand for rapid resolution of problems will challenge us all. We have seen from our experiments that it is achievable as long as we - and the businesses involved - work differently. I hope that we can use these experiments in casework as a model for the future across far more of our work.

operating an efficient infrastructure

This year, we have had to expand our organisation significantly to deal with the high volumes of cases being referred to us. We have been careful to develop responsibly. The ombudsman service is funded by the financial businesses that consumers complain about. We know how important it is to control costs and provide good value for money - now more than ever.

We have changed our case-fee structure to help us handle the cost pressures and financial risks brought about by the increasingly volatile demand for our services. We are now charging the very largest financial groups on a "group-account" basis, which focuses on the total proportion of our costs that can be attributed to each of them. We have also made sure that smaller businesses generally pay no case fees at all - by increasing the number of "free" cases for each business from 3 to 25.

Meanwhile we have continued to scrutinise our day-to-day running costs. We were pleased with the outcome of the efficiency review that the National Audit Office (NAO) carried out for us - which we published in January 2012. The review noted that, since the ombudsman service was set up, our costs have grown significantly more slowly than our caseload. During the year we have taken forward various recommendations suggested by the NAO as part of its review.

We recognise the potential of technology to help reduce the administrative costs incurred by businesses in handling complaints. We have been working with the largest businesses on exchanging data online so that we can significantly reduce paper volumes and improve speed and efficiency. We have also been upgrading our IT infrastructure to help improve standards of customer service.

Looking ahead, it is difficult to predict what will happen in the next year or so - especially when experience suggests that the only thing we can predict with confidence is a degree of volatility. We are "demand led" - so we need to be responsive and flexible. To help us to manage the volatilities in our caseload, we will continue to keep under review the balance between our permanent staff and those we recruit on shorter term contracts.

remembering what matters

I am proud of what we have achieved this year. We have adapted to significant changes. We haven't just coped - we have improved. We have taken the opportunity to try some new approaches and we have built flexibility into the way we work to be responsive - whatever the future brings. I am not complacent. I know that there are significant challenges ahead of us, and we will keep on pushing ourselves to meet them.

This annual review is, of course, all about the big picture. It is a round-up of what we saw during the year and how we responded to the issues our customers brought us. But I often hear my colleagues reminding themselves - and others - that "there are real people behind every case". I think we are acutely aware that our work affects lives, livelihoods and reputations.

That knowledge influences the way we treat our customers - and the way we run our service. It is why our values are so important to us. And it is why we always try and look at a problem from the perspectives of the people involved. But that does not mean letting our hearts rule our heads. Our job is to bring clarity and understanding, and to act with integrity. As demand for our service continues at record levels, we know we need to keep on bridging the divide between "the big numbers" and the real lives of the individual people we deal with.

We do not get it right all the time. But it is something we are determined not to lose sight of as we move forward.

Natalie Ceeney CBE
May 2013

photo: Natalie Ceeney CBE

photo: Natalie Ceeney, chief ombudsman

annual review 2012/13