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annual review 2013/2014

1 April 2013 to 31 March 2014

chairman's foreword

Another year, another half a million cases in, and another half a million resolved. With a workload like this, there is no question of our dragging our feet or resting on laurels at the Financial Ombudsman Service. Once again the pressures on the service have been intense.

During the year we received the two millionth case referred to us since our beginnings in 2000. What is remarkable about that is how relatively soon it came after we received our millionth case. In fact, it took a decade to have a million cases referred to us - but then less than three years to see a million more.

I see this as indicative not only of the sheer scale of the issues involved, but also - and more positively - of a greater awareness that our service offers a free and genuinely impartial route to getting a fair decision on complaints against financial providers. Continued outreach activity, to increase awareness and improve our engagement with communities across the United Kingdom, remains a high priority for us.

Yet again this year, complaints about the sale of payment protection insurance (PPI) have dominated the landscape. Even though the torrent of incoming cases on which I commented last year has slackened, we are still measuring our weekly intake of new PPI complaints in thousands. While we have resolved more PPI cases than ever before during the year - a record 389,730 in total - we still have some 400,000 to deal with.

I recognise what that means in terms of people having to wait to know the outcome of their complaints. And I am grateful for the forbearance people have shown. We will continue to work with the banks and other businesses to clear the stock of these cases. And I believe that an end is in sight, if not yet near.

It would be a mistake to let PPI cloud our vision of all the other complaints that we receive and classify as “general casework”. After all, there were over 110,000 of them during the year, and that word “general” conceals a wide diversity of cases - from current accounts to car insurance, pensions to payday loans.

While it would be good to think that the lessons of PPI have been learned, there is no room for complacency. And we are constantly on the lookout for trends which may indicate a cause for concern, and for possible action by the regulator. I am pleased to note the growing strength of our relationship with the Financial Conduct Authority (FCA) - now just over a year old - and the effectiveness of our cooperation with them.

One of the greatest challenges to the Financial Ombudsman Service is to be sure that we do not let the sheer volume of our current caseload prevent us from raising our eyes to the horizon and thinking about the future. We are mindful that our operating model has remained essentially the same since we began.

And we recognise that the huge developments that have taken place - and are continuing to do so in technology, in particular - create an urgent need to look hard at how best we should be shaping our service to be responsive to the changing needs of consumers and businesses.

New products and new technologies take off every year - think of Bitcoin and Paym, of Vine and FaceTime. This can lead to changing views on what fairness means, and changing expectations of how quick and responsive a service like ours should be.

Someone worried about a financial transaction carried out on a mobile banking app will neither expect nor want a prolonged paper-driven process to resolve their complaint. That points to the need for a more “segmented” service, where a complaint involving payment via a mobile is treated differently from, say, a complex pension or mortgage dispute which may call for detailed delving into the past and the piles of paper that come with it.

We are preparing ourselves to meet these challenges. This involves looking to shape our future round the different needs and expectations of our stakeholders - working with financial providers to help us become less process-driven, and with consumers to better understand what they want from us. This will build on the work of the latest of our three-yearly reviews - with the Future Foundation giving us insight into how the world is changing and how this is likely to affect the relationship between businesses and their customers over the next decade. I am confident that our dynamic and determined workforce will embrace the certainty of continuing change with their usual dedication and enthusiasm.

My final words are to record my personal thanks to Natalie Ceeney, who stepped down as chief ombudsman in November 2013 after four years with the service. The board and I are very grateful to Natalie for her achievements as head of the ombudsman service - which under her leadership became a Sunday Times Best Companies “Top 100” organisation, handling over 2,000 consumer disputes every day. I am also very grateful to Tony Boorman who has taken charge of the running of the service with his customary professionalism.

Sir Nicholas Montagu KCB
May 2014