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complaints seminar at the British Bankers Association

speech by Tony Boorman, principal ombudsman

London, 19 April 2010

I welcome this opportunity to talk at the BBA's seminar on complaint handling. I want to spend the time available this morning to support the work of all those involved in handling complaints in banks.

And specifically, I want to set out how we - the Financial Ombudsman Service and the banking sector - can better work together in future to improve complaints handling by:

  • helping businesses understand our approach;
  • handling complaints in a way that works for all;
  • planning and sharing information about trends; and
  • maintaining an open dialogue with businesses.

our experience

The Financial Ombudsman Service has a particular knowledge to draw on. Over the past ten years, we have seen well over 900,000 complaints about financial institutions - over an increasingly diverse range of issues from spread betting to pawnbroking.

Of course, not all those complaints have related to the banking sector. But in the financial year just ended, over 60 per cent of our cases related to banks. And bank-led groups are well represented in the list of businesses sending the largest volumes of cases to the ombudsman - something everyone can now observe following our decision to publish complaints data showing the number of new cases and uphold rates for the businesses that together generate around 90% of our workload.

The complaints that we see at the ombudsman service are only a small picture of the overall customer experience of banks. Indeed, they are a relatively small component of complaints made by customers about banks. But they give a valuable insight into the experience of customers with a complaint.

What does that experience tell us? It's important to stress that practice varies considerably across the sector - and indeed, even within the same institution. So neither the good nor the bad are anything like universal attributes. Most institutions in my experience illustrate a wide range of approaches to handling complaints.

So let me accentuate the positives - whilst noting those areas that seem to me capable of improvement. And let me also say how I think we can work better together to improve matters.

understanding and acting on the ombudsman's approach

First, we are increasingly seeing banks that want to understand and act on the conclusions of the ombudsman. This involves institutions researching our approach and feeding this back into the way they themselves handle complaints. Using "root cause analysis" in this way is not just about businesses avoiding unnecessary complaints being referred to us. It can also help identify why problems occur in the first place - to avoid problems in future.

We will not always agree about every case. And not every case has a significance beyond its own very individual set of background facts. But the general direction and approach of our case-handling should not come as a surprise. And it cannot be fair to your customers - or a sensible use of resources - for you to turn down complaints that you know, or should know, will in all probability result in a decision against your bank from the ombudsman.

The raw material you need here should be available in the decisions that we make. For larger institutions you will be able to pull together a number of ombudsman decisions from across your caseload. Our decisions set out our reasoning and explain why we have or have not supported your approach.

But we are going further by pulling together and publishing yet more information about what we do. We plan to double the amount of information already available in our online technical resource - part of our award-winning website.

And in ombudsman news - our regular newsletter - we have now published around 1,000 case summaries, describing our approach to common complaint issues. I want us to continue that process - publishing more and more information about what we do in practice, so that everyone can reach an opinion about the approach we take - based on fact not rumour.

making the process work for all

But a complaint process that eventually gives a well-considered answer is not providing good outcomes if the process is not accessible. Confident businesses welcome their customers raising concerns and queries whenever they arise. They want the way they handle complaints to be supportive and accessible for their customers.

In contrast, I fear that too often we still see customers failing to get a clear and accurate response from the bank at an early stage. And some institutions have adopted multi-layered complaints processes designed - it sometimes seems - simply to discourage all but the most determined of customers from completing their complaint.

I am conscious here that an undue focus simply on complaint volumes can distort outcomes. Indeed, businesses that improve their complaints handling will often record increased volumes of complaints, at least initially.

At the ombudsman service we have put a lot of effort into ensuring our service is accessible to all those who need it. We survey users - including businesses - to identify elements of our process that we can improve.

One recent change you will have seen in the way we communicate with consumers and businesses stems from our research into our users' changing needs. Consumers and businesses have asked us to be clearer about the reasons for our decisions and more focused on what is really important. Long letters - explaining, for example, how we have taken into account the background to the complaint - can confuse rather than clarify the messages we are trying to communicate. So in many cases, the paperwork we issue to communicate our decision on a complaint can be brief, succinct and much clearer.

I would like us to go further in shaping our processes to meet the needs of our users. We already provide some web support for complaint enquiries. But I hope we can go far further - and improving the services we provide will be a major focus over the coming period.

Of course, our core activity has two customers involved in each case - the business and the consumer - and their needs may not always be compatible. So in developing our approach, we will need to take fully into account the diverse needs of our wide range of users.

This is an area where you and we can work together. I hope we can share insights about process improvement and build clear and well signposted access to all stages of the complaints process.

One example will show the sort of collaborative working I mean to encourage. From our own work, and our discussions with businesses and consumer groups, a critical issue that has emerged about payment protection insurance (PPI) is the need for clear avenues of complaint and good quality information both from consumers and businesses.

Of course, there are significant and strongly-held different views about the merits of these disputes. But in many instances, the approach the parties took to collecting and sharing information about disputes was not fair to others. Ill considered requests and responses resulted in much heat and wasted effort for all, and gave rise to little progress or mutual understanding.

So we set out expectations of the parties in open letters, to encourage good practice both across businesses [letter in PDF] and claims-management companies [letter in PDF] - in cases that were being referred to us for decision.

And more recently, following extensive discussion with the industry, regulators, claims-management companies and consumer groups, we published new standard documentation for PPI complaints, including a consumer questionnaire and a business response form - designed not just to help our own handling of complaints, but also to help consumers and businesses resolve matters fairly and promptly without our involvement.

planning and information

Complaints handling is by its nature a demand-driven activity. The volume and focus of complaints is hard to predict. Getting staff with the right skills and training in place to meet the demands that customers make can be challenging - especially when some of those complaints relate to issues that occurred many years ago.

I know that many banks are looking afresh at the way they resource complaints handling. I know this is difficult. Certainly, the ombudsman service has faced its own challenges in scaling our work to rapidly changing demands. We are making significant use of outsourced teams - working closely with us in our offices, and adopting an identical approach, but able to be brought in at shorter notice than we could recruit and train directly-employed staff.

The rapid increase in caseload at the ombudsmen service over the last 18 months has certainly led to some disruption. Some businesses and consumers have had to wait too long for their case to be dealt with - especially PPI complaints, where we received double the number of cases forecast for the year.

And in cases requiring a final decision by an ombudsman, our waiting times are currently longer than they should be. This is why we recently announced - in our feedback on the public consultation on our plan and budget - that we would further expand the number of ombudsmen on our ombudsman panel, to improve service levels.

So I hope we can work together to identify trends and pressure points. To ensure that we plan for the demands that are made upon us, we need to be open about the complaints and issues that we are all seeing. As you know, to help identify trends we already publish data about the complaints we receive and their outcomes.

We have also set out how we plan to work with the regulators to identify "conduct risks" and enhance consumer protection. I hope that in discussion with banks and other financial businesses we can share yet more information about trends and potential areas for future complaints.

working with your business

This brings me to the efforts we are making to improve our dialogue with financial businesses. As you will know, we are establishing new liaison arrangements to ensure a strong dialogue with businesses - just as we are with consumer groups.

The new steering group will meet later this month, to ensure an open dialogue on strategic questions facing the sector. At the same time, we are introducing a new panel to support dialogue with practitioners across the financial services industry - ensuring that you are kept informed of developments at the ombudsman service and that we are aware of significant issues for you.

Meanwhile our technical advice desk continues to provide an avenue for general queries about our work - including an informal steer on how the ombudsman might view particular complaints.

Of course, our role as an independent and impartial service means there are limits on what we can discuss - without having all parties to the dispute involved in the same open discussion. But I do urge you to contact us if there are significant issues arising. We may, of course, not always see eye to eye with you. But I want your understanding of our approach - and decisions to be based on fact, not on rumour.

In this way I believe that, working together, we can improve services for consumers and reinforce customer confidence in your sector.

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