corporate plan and 2010/11 budget
overview of 2009/10
We set our plan and budget for 2009/10 against unprecedented levels of uncertainty in financial markets, and increasing challenges for financial businesses and their customers. In accordance with the aims set out in that plan, we have:
- responded flexibly to the uncertain demand for our services;
- used outsource partners where appropriate to manage fluctuations in workload;
- updated our computerised case-handling systems;
- enhanced our quality assurance systems;
- reduced waiting times for cases to be allocated and resolved;
- improved our accessibility; and
- increased the transparency of what we do.
The demand for our services reflected two long-standing trends. The first is the increase in the number of cases where consumers are dissatisfied with the financial business’s response and bring their complaint to the ombudsman. There were 31,347 new cases in the year to 31 March 2001, but this had risen to 127,471 new cases in the year to 31 March 2009.
The second is that a significant proportion of these cases relate to so-called "mass claims" – where large numbers of similar complaints are made by consumers about a particular financial product, often in relation to a limited number of financial businesses. Out of a total of 900,000+ new cases between 1 April 2000 and 31 December 2009, more than half have related to just six topics: mortgage endowments; dual-variable-rate mortgages; split-capital investment trusts; unauthorised-overdraft charges; credit-card default charges; and payment-protection insurance (PPI).
After consulting with industry and consumers about their view of our likely caseload, we based our 2009/10 budget on a working assumption that we would receive 150,000 new cases. Our current forecast is that by 31 March 2010 we will have received around 167,000 new cases, with the excess relating mainly to PPI.
We had carried forward around 15,000 cases concerning unauthorised-overdraft charges. These were on hold, and – under a waiver issued by the financial services regulator – very many thousands were also being stockpiled by banks and building societies pending the outcome of "test case" proceedings brought to court by the Office of Fair Trading. The Supreme Court’s judgment in November 2009 marked the end of that process.
The Court found broadly in favour of the arguments put forward by the banks and building societies. We now expect to be able to resolve most of the 15,000 cases we had on hold awaiting the outcome of the "test case". But we may receive more new cases as banks and building societies tackle the far larger volumes of cases they had stockpiled – and there is a steady inflow of cases about the treatment of customers in financial difficulties, where the amount owed often includes such charges.
We are on target to resolve 165,000 cases in 2009/10, in line with the budget. However, regulatory action around PPI cases means there is some risk that – as a number of financial businesses review their position in the light of clear and helpful guidance from the regulator – the resolution of a proportion of these cases might slip into the early months of the following financial year.
To reflect the record number of new cases, we have significantly increased the number of case-handling staff – both our own and those of our outsource partners. So we have still been able to reduce waiting times. The increased operating expenditure was only partly covered by increased income from case fees. The additional cost of more-expensive outsourcing has pushed our forecast unit cost up from £559 to around £587. This is expected to result in a deficit of £2.7 million and a modest call on our reserves.
We have implemented the first stages of our plans to improve accessibility and transparency, described in last year’s corporate plan and budget – ranging from extending the opening hours of our front-line customer contact division to launching an online complaint enquiry facility on our website, and from publishing complaints data about named financial businesses for the first time to expanding our series of regional consumer-adviser training days.
Following nominations from the public, in December 2009 our website was named "website of the year" in the Plain English Campaign's annual awards (in succession to the BBC, last year’s winner) – because it
provides advice and information on a complex subject in a straightforward manner. The introductory "about us" pages are welcoming and friendly. The layout and design of the pages is uncluttered and easy to follow, and care has been taken to ensure that the website is accessible to all users.
We have launched a long-term business-process improvement project, to ensure that our service keeps pace with the needs of users and continues to provide good value for money. The programme includes the use of external consultants, who will report in early 2010.