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annual review 2015/2016

1 April 2015 to 31 March 2016

chief ombudsman's report

In March 2016 we received our one-and-a-half millionth complaint about payment protection insurance (PPI) - accounting for half of all the complaints we’ve ever received since we were set up. These volumes of complaints - and the rate at which they’re still arriving each week - reflect the scale of the challenge that remains, two years after the peak of PPI, of fully restoring trust in financial services.

I’m encouraged that the recent Financial Advice Market Review, carried out by HM Treasury and the Financial Conduct Authority (FCA), is supportive of our role in resolving complaints, as well as the wider work we do. And I’m confident that this annual review of 2015/2016shows we’ve largely met the challenges we set ourselves at the beginning of the year - helping people move on from past unfairness, while building a service that’s fit for the future.

… keeping fairness at our heart - being fair and feeling fair ...

Fairness is fundamental to our work at the ombudsman. It’s something that’s continued to guide us throughout 2015/2016 - from the way we’ve approached each problem that consumers have referred to us, to the way we’ve managed and developed our service, and the way we’ve shared our insight and experience.

But if one thing’s clear from the problems we see, it’s that there’s no set formula for fairness. Everyday life doesn’t follow set rules - so problem-solving requires flexibility and pragmatism. And for our answers to feel fair - as well as being technically sound - we need to show we’ve understood what really matters to the individual people involved. So it’s reassuring that, once again this year, a significant majority of businesses and consumers agreed that we got to grips with the problem they brought to us.

… providing insight to encourage fairness

Maintaining our customers’ confidence in our service depends on our answers being clearly and consistently fair. As businesses look to learn and move on from past mistakes, this becomes increasingly important.

To give greater clarity and certainty around what we believe fairness looks like, during 2015/2016 we published around 35,000 of our ombudsmen’s decisions - meaning that, since 2013, we’ve shared publicly our final answers to more than 100,000 individual complaints. After listening to feedback, we’ve improved our online database of these decisions, so people can more easily find the insight they need to help stop the unfairness of the past repeating itself.

Since 2001 we’ve published 132 issues of ombudsman news - subscribed to by 14,000 people - to show our fair approach in action. Across the eight editions we’ve published this year, we’ve highlighted wide-reaching themes and challenges - including customer vulnerability, ageing and debt - which it’s vital that financial businesses, regulators and other experts work together to address.

And after sharing our concerns about payday loans last year, we’ve continued to provide insight and promote discussion around problems we’re consistently seeing - including perceived age discrimination, small businesses’ dependence on financial providers, and the never-ending evolution of banking scams.

In our independent position, we hear both sides of every story - in hundreds of thousands of individual circumstances each year. The window this gives us into changing attitudes and wider concerns - together with our horizon-scanning work - means we’re often able to identify emerging patterns and trends.

So it’s essential that we maintain our close relationship with the FCA, who can take action to prevent problems from escalating. Over the last year, we’ve supported the FCA’s work around a wide range of key issues and themes - from debt management and consumer vulnerability, to small businesses’ experience of financial services.

And following the Financial Advice Market Review, over the coming months we’ll be ensuring we’re making the very best contribution we can towards fairness in this area.

We’ve also continued to support the work of policymakers - who’ve called on our impartial insight into fairness in financial services. As the fall-out of PPI continued into this year, in March 2016 I talked to the House of Commons Public Accounts Committee about the unprecedented challenges we’ve faced - as MPs considered financial services mis-selling, in light of the National Audit Office’s recent review in this area.

And in response to the persistent activity of claims managers, our relationship with the Ministry of Justice and the Claims Management Regulator - as well as our frank dialogue with claims managers themselves - has helped to reduce the unfair burden of inappropriate claims, on us as well as on financial businesses.

… be trusted and respected - we're the people who listen and know what to do ...

These conversations with our stakeholders have helped to ensure that throughout 2015/2016, we’ve continued to influence long-lasting decisions about fairness. But it’s also essential that our approach is understood and applied on the complaints front-line - where millions of individual decisions about fairness are made every day.

So once again this year, we’ve met people working for the larger financial businesses - whose customers account for a significant proportion of UK consumers as a whole. At our workshops for businesses, we’ve challenged complaints handlers to find fair answers to some of the toughest disputes we see - involving people in vulnerable circumstances, including those who face losing their home and their security.

We’ve also met hundreds of small financial businesses - from car dealerships and insurance brokers, to pawnbrokers and IFAs - who may not know the ins-and-outs of the ombudsman, because their customers rarely, if ever, complain.
This engagement involved running dozens of our practical workshops across the UK - as well as working with local business groups and forums. And we’ve continued to engage with trade associations and networks - who’ve again helped us to identify and respond to their members’ questions and concerns.

I hope that the volumes of calls to our technical helpline - more than 23,000 enquiries in 2015/2016, a rise of around 10% on the previous year - is a good reflection that people on the frontline of financial services continue to look to us for clarity and common sense.

To make sure this continues to be the case, we’ve needed to carry on investing in our people. Collectively at the ombudsman, the breadth of our experience and industry-recognised qualifications means we’re equipped to find a fair answer to each and every problem that’s brought to us - whether it’s a case of clearing up a misunderstanding, or unpicking a long-standing and complex dispute.

As I regularly highlight, there’s considerable uncertainty around the number and nature of the problems we’ll be called on to sort out in the future. And increasingly too - as this annual review shows - the issues we’re seeing cut across the traditional categories of financial services.

So in particular this year - to make sure we’re able to respond flexibly to changes in demand - we’ve focused on developing our capability and capacity to handle a greater breadth of problems. And to complement their technical product knowledge, we’ve continued to develop our people’s wider problem-solving expertise.

… be recognised as well run and efficient ...

I know that our stakeholders - and particularly the financial businesses who fund us - expect a service that’s value for money, as well as having expertise.

So over the last year, we’ve challenged and improved our ways of working - squeezing our budgets and making efficiencies across our operation. These have included streamlining our support functions, developing our use of electronic files, and improving our environmental performance.

Our focus on value means that, over the course of 2015/2016, we’ve provided our service at a lower cost. Two thirds of our work was again paid for by the largest businesses whose customers use us the most. So while we once again froze our individual case fees for businesses, more than nine in ten businesses whose customers complained to us didn’t actually pay any case fee at all.

Unfortunately, we’ve still needed to invest considerable resources to put right the mis-selling problems of the past. Years after the peak of the scandal, the fall-out of mis-sold PPI has continued to have an impact on our work. And uncertainty resulting from the Supreme Court case of Plevin vs Paragon Finance - involving the level of commission on a PPI policy - meant we haven’t been able to progress a significant number of cases as quickly as we would have liked.

This is clearly disappointing - and I’m grateful for our customers’ ongoing patience and cooperation. I’m determined to make sure we continue to use our experience of PPI to prevent unfairness on this scale in the future.

But despite the continuing challenge presented by PPI, we’ve remained focused on ensuring we’re ready for the future. In 2015/2016 the new ways of working that we’ve been trialling over recent years have increasingly become business as usual for us. I’m really encouraged by the enthusiasm we’ve seen among businesses - as we’ve worked together to remove barriers to finding fair answers at the earliest possible stage.

Our focus on efficiency and flexibility means that, in all our work other than PPI, we’ve resolved two thirds of complaints within three months. We’ve also shown we can reach the standards expected of us under the EU directive on alternative dispute resolution (ADR) - after being approved as an official ADR provider in July 2015.

As we’ve invested in our people, we’ve also improved our infrastructure for sharing their combined know-how - strengthening our ombudsmen’s role at the heart of our service, and launching our digital knowledge management platform.

… making sure we reach and help those who need us ...

These improvements aren’t only about showing we’re a modern service. They’re also crucial if we’re to reach people who are turned off by the perceived bureaucracy of the “complaints process”.

As we’ve continued to develop our digital services this year, thousands more people have got in touch directly with us from a mobile device - without having to download a traditional form if they want to take things further.

And of course, with people increasingly using social media to complain, these informal channels are increasingly becoming part of our own service. During the year we engaged with consumers, businesses and others who share our interest in fairness - providing answers and direction in thousands of online conversations.

We’ve also continued to use feedback to develop our online resources - helping people to find fair answers without our direct involvement. In 2015/2016 we added a range of practical problem-solving tools - covering areas ranging from packaged bank accounts and payday loans, to car insurance and equity release.

But we recognise that not everyone is - or wants to be - online. Reflecting this, over the course of the year we received over 1.6 million enquiries from people who wanted to talk through the problem they were having.

The value people place on human conversation goes to the heart of our awareness-raising work. During 2015/2016 we’ve looked for new ways to engage with local communities - including, as we’ve highlighted in this annual review, meeting hundreds of local people and businesses in Birmingham’s Bullring shopping centre.

We’ve again shared our experience with front-line consumer advisers - who help us reach people who may not know about us, or feel confident contacting us themselves. Together with featuring in thousands of regional media stories, this means we’ve been able to encourage fairness without the costs of local offices - giving practical support to communities across the UK.  While public trust in financial services remains a work in progress, it’s reassuring that consumer confidence in us has grown - with three in four UK adults now saying they trust us.

The diversity of the communities who rely on us continues to be reflected in the backgrounds and experience that our people bring to their everyday work. And at a time when, disappointingly, women still remain under-represented in senior roles in many areas of business, I’m pleased that women account for half our professional leaders at the ombudsman.

But true diversity has to be more than just quotas and figures. For us it’s part of our commitment to making fairness central to everything we do.

… remembering what matters ...

Our line of work - finding fair answers to problems - inevitably involves looking back. Reflecting on 2015/2016, it’s clear there’s still a lot of hard work to be done before we can all finally move on from PPI. But I hope this annual review shows we’re focused firmly ahead - building a service that’s accessible, sustainable and relevant to life today. The progress we’ve made speaks to the enthusiasm and hard work of the people who work here - for which, once again, I’m incredibly grateful.

As financial businesses look to innovate and adapt, new questions about fairness will be asked. As this happens, the types of conversations we’ve been having this year - sharing our experience and providing common sense and clarity - will become only more important.

That’s a big responsibility. But I’m confident that we’re on a sure footing to find answers to those questions - encouraging fairness and confidence into the future.

Caroline Wayman
May 2016