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ombudsman news

issue 112

September 2013

ombudsman focus: the year so far

Half way through the financial year, September is always a good opportunity to take stock of what's happening at the ombudsman - and outside it. ombudsman news asked chief ombudsman, Natalie Ceeney, for her take on the year so far.


have you noticed any particular trends in the complaints the ombudsman service has received so far this year, Natalie?

Whenever people ask me that question I always start by distinguishing between "PPI and non-PPI". It's impossible to talk about trends in our work without being clear about that distinction.

So let's start with PPI. By now, we're all familiar with the story. It's acknowledged as the biggest mis-selling scandal in the history of the UK's financial services. PPI is the most complained-about product we've ever seen. To give you an idea of scale, over the last year, we've been receiving up to 3,000 PPI complaints a day. In just one year, complaint volumes went up by 140% - and they weren't low to start off with.

So it's been huge, and it's still huge. But - and this is the update - there are signs that it's starting to slow down. That doesn't mean the end is in sight. Far from it. But we are starting to see the volume of complaints level off and edge slightly downwards.

I think we'll all breathe a sigh of relief when everyone who's owed compensation has received it. In the meantime, we're working through all of the individual cases as best - and as fast - as we can. We've made huge progress in increasing our capacity to deal with the cases - and the thousands of cases that people are still referring to us.

leaving PPI aside for a minute, is there anything you've seen so far this year that concerns you?

It's disappointing that we're starting to see more complaints about "packaged" bank accounts - those current accounts that include things like breakdown cover and travel insurance.

There are some case studies on packaged accounts in this issue of ombudsman news - and I hope some of the things we're highlighting will be helpful in preventing problems before they get as far as the ombudsman.

On a positive note, we've been working closely with the banks in this area. I've been encouraged to see willingness in certain quarters to learn from the problems we're all seeing - and to ensure that as many complaints are resolved by the banks themselves, rather than needing to come to us for a decision.

Mobile phone insurance is something else that's on my mind at the moment. Although we've received relatively few complaints about it, we are seeing more and more examples of mobile phone insurance being added to on consumers' accounts without their realising - and in some cases, unusual or important terms and conditions that haven't been made clear to consumers.

But in this area too, I've been encouraged by parts of the industry's response to the problems we've been highlighting. My team has been working closely with the some of the big players in this sector, and I know that some providers have taken steps to try and prevent problems at an early stage. Some have clearly changed the way they do things - which is a great example of extracting the lessons from complaints, and using them to improve customer service overall.

The third area I'd like to mention is payday lending. This isn't because we've seen significantly more complaints over the last six months, but because we really can help in this area. By nipping problems in the bud complaints can be identified and sorted out relatively easily - to everyone's benefit. We're working hard to make sure that people who might come across a problem with short-term lending know we're here - and have enough confidence to talk to us.

are there any developments you've been particularly encouraged by this year?

Earlier this month we published our regular six-monthly complaints data about named financial businesses. That data suggests that for some businesses, better complaints-handling has moved up the agenda. I take a lot of encouragement from that. I'm hoping it reflects a broader shift towards a more customer-oriented outlook. In time, that might develop into businesses responding more positively to what complaints are actually telling them - rather than seeing complaints handling as a fundamentally negative "compliance function" that needs to be "dealt with".

But this shift isn't universal - as the data shows. Unfortunately, not all of the major financial businesses are yet thinking - or acting - this way. I'm optimistic, as things do seem to be improving - but cautiously so, as there is still a huge amount of scope for improvement.

how have things been going with the new regulator - the Financial Conduct Authority?

Although the FCA took over officially from the Financial Services Authority on 1 April 2013, things didn't suddenly change overnight. In reality we've been in touch with their chief executive, Martin Wheatley, and people in his team for the last 18 months. So, this doesn't feel "new" to us!

Part of the government's thinking when it created the new regulator was that there needed to be earlier intervention if things were going wrong in financial services - to make it less likely that a "mass detriment" situation like mortgage endowments or PPI could happen in the future. The new regulator has been putting the emphasis on this kind of proactive earlier intervention - and we've certainly seen things move quickly around "swaps" (another product area that features in this month's ombudsman news) and in a couple of other areas too, such as the recent intervention on card protection insurance. This regulatory commitment to deal with problems early, and quickly, can only be welcomed.

clearly it's been a time of massive change at the ombudsman service. How has the organisation been coping?

The scale and pace of change over the last year or so has certainly been a challenge for us. We have had to respond to unprecedented demand. But this is what we are here for - to respond to problems and complaints.

The good news is that we've now recruited almost all the people we need to deal with the recent escalation in demand. It's been a huge job to make sure that everyone who's joined us is fully up to speed - and able to work to the high standard we expect. But this job doesn't go away. Training and developing our people is continuous.

I won't pretend for a minute that the changes we've been through haven't had an impact on our customers. We've had to ask people to wait far longer than we'd have liked - and certainly in PPI, many people may be waiting for up to two years to get a decision about their case.

We know this isn't good and is hard for people to accept. We have to look at each case individually, using well trained staff, which takes time. But we will get there. By Christmas, we'll be working at full capacity - and able to work through more complaints than ever before.

At some point in the future, the current volume of PPI complaints will subside - and things will change again. But for now, this is how it is - and we're doing everything we can to keep our standards high and to work through it.

surely everything you've just described has had an impact on the rest of your work - the things that aren't PPI?

Actually no. We took the conscious decision 18 months ago to ring-fence PPI from the rest of what we do. We knew then that we just couldn't allow everything else to be affected by what was happening on the PPI front - and that we didn't want to ask staff working on cases other than PPI to have to deal with the burden of growth and change that I've just mentioned.

So we've actually been reducing the time customers have had to wait where complaints involving other than PPI. We've learnt some valuable lessons from the work we've done to address specific problems - like the difficulties banking customers had when their bank was hit by IT problems last year. We've also been building on the lessons we learnt from our "experimental" casework project - where we did things differently for people having problems with e-money transfers.

So outside PPI, we've been moving forward and making improvements. Like any organisation worth its salt, we're looking at how we can meet the changing needs and behaviour of our customers. And they really are changing. There'll be more to come on this, so keep an eye on ombudsman news and our website.

what do you expect to happen in the complaints world over the next couple of years?

Complaints are closely linked to hard times. We all know that when things are tough financially, people are more likely to look at their finances and question things. But it's not just about people's attitudes to money. Economic conditions themselves directly influence financial products like mortgages, pensions and investments. So when times are hard and financial markets are going through a period of volatility, people are directly affected - which can, and does, translate into problems and complaints.

There's a lot of talk of economic recovery at the moment - which is great news for us all. So we might well start to see fewer complaints. But equally, I'm convinced that consumer expectations have risen over the last few years - and we can't put that genie back in the bottle. Trust in institutions and the established professions - doctors, bankers, MPs - has diminished. And many people turn to other people like them - usually online - to validate their feelings and answer their questions.

Of course, people have always had worries and concerns - it's just that consumers might not have complained "officially" before. All the research we - and others - do suggests that most people in the past just put up with poor service - and perhaps now they just won't. Times have obviously changed.

So I think things will be different in the future - in some cases radically different. I certainly believe that consumer attitudes have changed, which means that financial businesses' attitudes to customer complaints need to be different too.

finally, there's been a lot of talk over the summer about the number of women on boards. What are your thoughts on quotas for women board members?

I find it hugely frustrating that boards of companies find this such a difficult issue. It's utter common sense that organisations should look for the very best talent - and of course that means hiring and promoting out of the talent pool that actually reflects society. I know so many bright, talented, capable women that I just can't see why certain organisations wouldn't look at them as leaders. These companies are hurting themselves by limiting women's career prospects and failing to engage with their diverse customer base.

Having said that, I don't think quotas are the answer. I for one wouldn't want to be hired for a job knowing that I was just making up the numbers. But at the same time I know that many organisations will "get what they measure". I'm therefore in favour of aspirational targets for diversity at all levels in organisations (ethnicity as well as gender), but not of quotas.

I'm proud to say that the ombudsman service wouldn't bat an eyelid if someone gave us diversity targets tomorrow. Women thrive in senior positions here - just as their male colleagues do. We have roughly 50:50 representation of men and women at every level here - including our board and executive team. But we're not going to take our eye off the ball. Why would we let talent pass us by?

image: ombudsman news

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.