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ombudsman welcomes Lord Hunt's report on "opening up, reaching out and aiming high"

9 April 2008

The board of the Financial Ombudsman Service today welcomes the publication of Lord Hunt of Wirral's report, "opening up, reaching out and aiming high – an agenda for accessibility and excellence in the Financial Ombudsman Service" – which follows an independent six-month review of the ombudsman service and its relationship with consumers, the financial services industry and other stakeholders.

Lord Hunt's report – based on his wide-ranging discussion and consultation with those who use and have an interest in the ombudsman – was commissioned by the board of the Financial Ombudsman Service as part of its focus on accessibility and transparency.

In his review, Lord Hunt concludes that:

  • the ombudsman's approach to settling disputes on the basis of "what is fair and reasonable" is essential – to underpin the ombudsman's credibility as an informal non-legalistic alternative to the courts;
  • charging consumers to access the ombudsman – as some have proposed – would comprehensively damage accessibility;
  • there is no convincing case for an external appeals mechanism – on top of the ombudsman service's current internal appeals procedure;
  • there should be no change to the ombudsman's current approach to formal hearings (holding them only where absolutely necessary – as most disputes can be decided on the basis of paper evidence);
  • there is no requirement for a small firms' division – as long as the ombudsman's Smaller Businesses Taskforce continues to focus on the particular needs of small firms;
  • there should be closer monitoring and regulation of the activities of claims management companies;
  • there should be greater openness – in relation to the ombudsman's approach, the relationship between the ombudsman and the regulatory system, and the performance of individual financial services businesses in handling customer complaints.

Lord Hunt's review includes 73 specific recommendations for the ombudsman service, including:

  • significantly increasing investment in pro-active communications – including TV advertising, consumer campaigns and strategic partnerships with government and others;
  • commissioning a new consumer-friendly brand-name instead of ombudsman;
  • offering a freephone service (instead of the current subsidised 0845 number) and extended opening hours;
  • appointing "case advisers" – working alongside adjudicators and ombudsmen – to guide the most vulnerable consumers through the complaints-handling process;
  • launching an awards scheme to identify and reward businesses who handle complaints well – matched by a "wooden spoon" for the worst performers;
  • publishing comprehensive information on all aspects of ombudsman policy and methodology (but not decisions on all cases) – as well as benchmarked data on how individual financial services businesses handle complaints;
  • placing all the ombudsman service's formal communication with the regulators on the public record.

The chairman of the Financial Ombudsman Service, Sir Christopher Kelly, welcomed Lord Hunt's findings and recommendations, saying:

Lord Hunt has listened over the last six months to the full range of comments, opinions, ideas and suggestions – on how the ombudsman service should position itself in relation to the outside world. In leading his independent review, he has established a consensus on which we can build, as we approach our first full decade.

I welcome the report's recognition that the ombudsman service's existing model works well in providing a fair, effective and efficient service. However, Lord Hunt sets out a clear agenda for responding to the rapidly-changing complaints landscape – with customers of the ombudsman service now more numerous and more diverse in their backgrounds and levels of financial literacy than ever before.

Lord Hunt's report reminds us of the considerable challenges we face – as our remit grows beyond "traditional" financial services such as pensions and mortgage endowments, to cover areas such as consumer credit and debt management where problems can disproportionately affect the most vulnerable and least affluent consumers.

Some of the recommendations for accessibility and transparency that Lord Hunt makes in his detailed and thought-provoking report endorse strands of work that we already carry out. Other recommendations involve innovative – and sometimes radical – departures from current practice. The implementation of the more ambitious proposals would clearly have significant implications as far as our budget and resources are concerned.

However, the board and management of the ombudsman service are committed to taking forward the actions needed to ensure that accessibility and openness are at the very heart of our service, as we evolve to face new challenges in a changing world – and we will consider all of Lord Hunt's very helpful suggestions in that light.

Lord Hunt's report, "opening up, reaching out and aiming high – an agenda for accessibility and excellence in the Financial Ombudsman Service"

notes for editors

  • The board of the Financial Ombudsman Service announced on 6 September 2007 that it had engaged the Rt Hon Lord Hunt of Wirral MBE (David Hunt) to lead an independent review - focusing on the openness and accessibility of the ombudsman service to its wide range of customers and stakeholders.
  • Lord Hunt published his detailed "call for evidence" - seeking views and information from people and organisations with an interest in the ombudsman service – on 16 October 2007.

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