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annual review 2013/2014

1 April 2013 to 31 March 2014

other work we have done

Our work in settling financial complaints is underpinned by our relationships with our customers and stakeholders. These relationships are very much two-way. We not only share our own knowledge and experience, but also seek formal and informal feedback on our service and how we operate.

This chapter highlights the wide range of stakeholders and customers we engaged with during 2013/2014 - and the particular issues and activities this involved.

working with the regulators

Some of our most important relationships are with the financial services regulators - the bodies that set the rules that the businesses we cover must follow.

This year we continued to work closely with the Financial Conduct Authority (FCA) - in its first full year of operation since it took over from the Financial Services Authority in April 2013. We also worked with the Office of Fair Trading (OFT) - which during the year was responsible for licensing businesses providing consumer credit. This responsibility was transferred to the FCA in April 2014.

Our joint coordination committee - bringing together the ombudsman, the FCA and the OFT - met twice over the year.

These regular discussions help to identify early on any issues that could potentially affect consumers or businesses. The discussions also help determine whether regulatory action is needed.

Our main areas of work with the regulators during the year included:

  • Helping to put in place practical measures for the FCA’s new remit in relation to consumer credit regulation.
  • Sharing information with the OFT - describing patterns of complaints and highlighting areas of poor practice where we found them. For example, we shared our insight into the complaints we were receiving about payday lenders when the OFT reviewed that market.
  • Contributing to the FCA’s “thematic reviews” of specific products and services. In particular, as part of the FCA’s review of how businesses handle complaints, we offered our detailed analysis of trends we see in the complaints that reach us.
  • Working together on our plan and budget, which we consult our stakeholders on each year - and which the FCA must approve.

As well as the financial services regulators, we also work with other regulators whose activities have an impact on our own customers and operations.

For example, we regularly provide the Claims Management Regulator (CMR) - part of the Ministry of Justice - with information about the numbers and types of complaints that claims-management companies refer to us. And this year, we worked alongside the CMR as it drafted and consulted on proposals to amend the Conduct of Authorised Persons Rules - which relate to the service standards that claims-management companies must meet. If we see that claims managers aren’t complying with these rules, we notify their regulator.

our work with the financial services sector

The everyday working relationships that our casehandlers have with financial businesses are crucial to sorting out consumers’ complaints. But we also take a strategic approach to dealing with the businesses we cover. This helps us make sure that our wider messages and objectives are communicated effectively - and at an appropriate level.

We meet individually with the largest businesses that account for the majority of the complaints we receive. One way we do this is through our cross-sector steering group meetings, where our chairman and chief executives from these businesses discuss major issues - for example, our plan and budget and complaint trends. The group met four times last year - and the minutes of those meetings are published on our website.

On an operational level, we share information with businesses about the complaints their customers are referring to us - to help them identify where they can improve their business practices, handle complaints better, and prevent complaints from arising in the first place.

In the chapter called “what the complaints were about” we talk about ways we cooperated with businesses over the year to overcome particular problems they were having. For example, we worked closely with a number of banks that had IT glitches - which had led to many customers not being able to access the money in their accounts for a period of time.

However, we also try to take a longer-term view - working with business and other stakeholders to address broader issues affecting the industry. For example, in 2013/2014 we responded to the Association of British Insurers’ proposal to amend the Critical Illness Insurance Statement of Best Practice. We also replied to the consultation on Sir Richard Lambert’s Banking Standards Review.

our national and international role

A recurring theme in our work with our stakeholders this year was the future of complaints and complaint-handling. At national level, we were asked for our insight at two parliamentary inquiries. And internationally, we were involved in the final stages of plans to improve dispute resolution for consumers across the European Union.

We have close relationships with other ombudsman schemes in the UK - as well as other types of organisation providing a similar service. As we explained in the chapter called “the complaints we received”, we signpost many consumers to other organisations where it looks like we can’t deal with a complaint - but someone else could.

We also cooperate with other organisations through our membership of the Ombudsman Association. This brings together ombudsmen and other “alternative dispute resolution” (ADR) schemes from across Britain and Ireland. Last year we took part in a review of the Association - which aimed to identify how it can go further in promoting best practice and raising consumers’ awareness of the alternatives to court action.

We also took part in two inquiries by the House of Commons Public Administration Select Committee into how the public sector - particularly the Parliamentary and Health Service Ombudsman - handles complaints and uses complaints data. Although our service wasn’t directly within the scope of these inquiries - because we deal with complaints about private businesses - we were invited to participate based on the strength of our experience.

In December 2013 our chief ombudsman Tony Boorman, answered Committee members’ questions about our work, what the public sector could learn from it, and how ombudsman schemes could cooperate more closely. We also submitted written evidence.

Although we usually refer those consumers we can’t help to other UK-based organisations, we sometimes refer them to overseas bodies. This is why it is important we always take the time to understand each individual situation - so we can get the consumer to the right place at the outset.

One way we maintain relationships with similar organisations outside the UK is through our membership of FIN-NET - the international network of financial dispute-resolution schemes. In November 2013 we hosted FIN-NET’s annual meeting. As well as meeting representatives of established schemes, we also shared our experience with countries in the process of setting up ombudsman schemes - including South Korea, Cyprus, Singapore and Uganda.

In May 2013 the European Commission finalised its Directive on ADR - and the related topic of online dispute resolution (ODR). The aim of the Directive is to extend the benefits of ADR - that is, dispute resolution outside the courts, like ombudsman schemes - to as many consumers and businesses as possible. The Directive will:

  • Set EU-wide standards for providing ADR services.
  • Create an EU-wide system for resolving complaints about online purchases.
  • Require each member state to provide an ADR service for any trader who wants to sign up to one.

We have been active in the European Commission’s programme on ADR since it began in 2009. During the year we worked alongside the Department for Business, Innovation and Skills as it talked with the Commission about the content of the Directive and how it should be implemented in the UK. We were also part of the Commission’s ODR working group. The UK Government will now consult on its final plans for implementing the Directive and confirm these later in 2014/2015.

working openly

We aim to be as open and helpful as possible when people ask us for information - as well as meeting our obligations under the Freedom of Information Act, which we have been covered by since November 2011.

Last year we received more than 370 requests under the Act, made by a variety of people - from consumers with complaints with us to researchers and academics looking into different aspects of financial services.

The topics we were asked about ranged from our approach to complaints about different financial products to the way our casework teams are structured. We were often able to direct the person making the request to our website - because our policy has always been to publish as much as we can about our organisation and our work.

As part of our regular cycle of three-yearly external reviews, our board invited the Future Foundation to help us understand how consumers’ expectations of brands and services are likely to change over the next ten years - and invited our customers’ and stakeholders’ views on these issues.

publishing ombudsman decisions

The Financial Services Act 2012 came into effect in April 2013 - shortly before last year’s annual review was published. It introduced the requirement that we publish all of our ombudsmen’s final decisions (apart from in cases where it would be inappropriate to do so). During the year we published 22,968 decisions on our online “decisions database”, which can be searched by product type, outcome and key words.

sharing our experience face-to-face

Our outreach and stakeholder-liaison activities form a key part of our commitment to sharing our experience with the outside world.

As our eyes and ears “on the ground”, our outreach team meet our customers and stakeholders face-to-face - listening to their views and concerns about financial services, the ombudsman, and wider issues. In 2013/2014 our work included:

  • Running our relationship-management programme for the largest financial services groups - as well as our industry steering group and our industry panel.
  • Organising events across the UK - from issue-specific conferences for larger businesses and claims managers, to 25 targeted workshops for businesses who we receive few (if any) complaints about.
  • Hosting more than 20 training days for community and advice workers across the UK - sharing our insight and approach with people others turn to for help - and hosting our six-monthly consumer liaison forum for representatives from consumer groups.

In addition to our work with policymakers, we also have day-to-day relationships with many parliamentarians - who take an active interest in our work and engage with us regularly. Last year, this involved:

  • Responding to 601 enquiries from MPs - who had contacted us on a particular constituent’s behalf, or asked a broader question about our work.
  • Answering over 30 ministerial questions.
  • Participating in a range of events for MPs and their caseworkers - including complaints workshops, constituency “drop-in” surgeries, and events held at local supermarkets and food banks.

our advice desk

Our advice desk is our dedicated service for people dealing with complaints - including complaints handlers in financial businesses, claims managers and advice workers supporting consumers in their local communities. By giving an informal first take on a situation, we can help sort out the problem sooner rather than later - preventing a formal complaint from being escalated.

After receiving a record number of enquiries during 2012/2013, the number of calls to our advice desk continued to increase during the year. We received 24,551 enquiries - a 5% increase on the previous year.

During the year 78% of people who had used the advice desk said they were “very satisfied” with the service.

The following examples illustrate of the diversity of questions we answered.

a lot of hot air

An insurance company called for our take on a farmer’s claim. Frightened by a hot air balloon flying close overhead, the farmer’s cattle had run into some nearby fencing - causing significant damage to it. However, the insurer wasn’t convinced they should pay out - as their buildings insurance policies excluded cover for damage “caused by aerial devices”.

We considered the reason behind the exclusion. And we explained to the insurer that we felt it was intended for situations where an “aerial device” itself had caused damage. Once we’d pointed this out, the insurer agreed that it would be unfair to apply the exclusion in this case - as the cows, not the balloon, had collided with the fence.

what’s in a name?

A bank called about a consumer they were taking to court for mortgage arrears. The consumer had undergone gender reassignment surgery - and was now a woman. On the advice of their in-house legal team, the bank had written to the consumer explaining that, to comply with court procedures, the summons needed to mention any previous names they’d had.

Unfortunately, the bank had used a window envelope which clearly showed the consumer’s previous, male name. And the consumer’s male partner, who hadn’t known about the surgery, had found out. The consumer had made a complaint - and the bank wasn’t sure how to handle it.

The bank acknowledged that they had caused the consumer upset and embarrassment. We suggested that they should talk to the consumer about the impact their actions had had on her. We felt the complaints handler should consult the bank’s own specialist diversity team - who may have dealt with a similar situation before. However - based on the information we’d heard - we thought compensation of at least £500 would be appropriate given the upset caused.

give and take

An advice worker called for our view on how a lender had treated their client. The consumer was in financial difficulties - but, despite being aware of this, the lender had taken money from her current account to repay an outstanding balance on a loan account. This had caused the consumer to go over her agreed overdraft limit - and charges were being applied to her current account.

We explained to the adviser that, generally speaking, lenders are allowed to use funds from one account to repay an outstanding balance on another - provided the terms of the account allow this. In this case, however, this had caused the consumer to exceed their overdraft - so we felt the lender had acted unfairly.