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annual review 2012/2013

1 April 2012 to 31 March 2013

chairman's foreword

Over the past year, the challenges faced by the Financial Ombudsman Service have been on a scale that nobody could have foreseen. This annual review demonstrates that in the starkest terms. During the year consumers referred over half a million new cases to us - including a 140% increase in complaints about mis-sold payment protection insurance (PPI).

So it is a matter of great pride to me - and a tribute to the dedication and professionalism of the people we are lucky to have working for us - that this annual review is a tale not of woe, but of achievement. We have resolved more cases than in any previous year - and each of those cases has called for careful attention to detail and individual judgement.

There are no short cuts. Of course, we would prefer to be able to offer the prospect of an immediate resolution to people's complaints. But where we cannot resolve a dispute as quickly as we would like, we take pains to ensure that people are kept abreast of the progress of their case and what they can expect from us. I am pleased to note that our survey evidence shows that satisfaction among consumers who refer complaints to us remains generally high.

That is critical to us in a world where both demand for and expectations of our service are at unprecedented levels. A number of external factors have contributed to this - notably the further shrinking of confidence in the banking sector, caused by fresh problems this year, such as the controversy over the manipulation of LIBOR, the interest-rate benchmark.

For our part, we are committed to working constructively with our counterparts at all levels across the financial services industry, from chairman to caseworker. We believe that by doing so - and by helping them to deal quickly and fairly with the complaints that their customers bring them - we can play a role in rebuilding the trust that has been damaged in recent years.

In the "blame game" that too often surrounds the financial sector, there have been suggestions that the PPI crisis is a manufactured one, bolstered by a raft of bogus complaints made through claims-management companies. The evidence suggests that this is simply not true - as our rates for upholding complaints, including those made through claims managers, show.

At the same time, it is true that there is a need for firmer regulation of claims-management companies at the "cowboy" end of the industry. After all, most of us have experienced the irritation of those unsolicited phone calls, texts and emails. And from the ombudsman's perspective, we are keen to make it known still more widely that consumers do not need to use claims-management companies.

They have an equal chance of "winning" by bringing their complaint to us themselves for free, which increasing numbers of consumers are now doing.

Some might think there is an inevitable danger that the sheer volume of PPI complaints - with up to 2,000 new PPI cases referred to us every day - could take over our thinking and planning. We will not let it do so. Whatever its scale, PPI will, in the end, be transitory. Meanwhile, our casework in all other areas, from pet insurance to pensions, continues to account for over 100,000 complaints annually.

This means we face the task of not letting up on our standards, while at the same time planning for a future which will inevitably see significant changes in consumers' expectations and behaviour. We are tackling that task. Our standards and values have not been allowed to suffer by our having to double in size to meet the huge growth in demand. Nor will they do so in the face of the further demands made of our service that we expect to see in the coming year.

At the same time, we have been developing innovative solutions to help us provide an ever-improving service - and we have trialled projects with financial businesses to explore ways in which we might provide a quicker response to certain complaints.

This provides a key to the way we will develop the service for the future. The customer is firmly at the heart of all our planning. Our aim remains to enable consumers and financial businesses to reach a fair and quick resolution to their disputes. That points towards our working increasingly with both sides to deploy a service tailored to the nature and complexity of each individual complaint. Some cases will be capable of quick and informal resolution - perhaps through mediation. Others, however, will still call for the full panoply of our existing more formal procedures.

That greater responsiveness lies at the heart of our strategy for the future. Meanwhile, we face the coming year with optimism: unwavering in our values; strong in our people, our executive and our board; and confident in their ability, yet again, to meet the formidable challenges ahead.

Sir Nicholas Montagu KCB
May 2013