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annual review 2007/08

1 April 2007 to 31 March 2008

other work we have done

Our work involves more than settling disputes between consumers and businesses providing financial services. It also involves feeding back the lessons learned from our work, as well as working with others - at home and abroad - who have an interest in what we do.

In this section we highlight some of this other work we have done. Further information on this work is in our corporate plan, published in January each year.

extensions to our remit

Under the Consumer Credit Act 2006 our remit was extended in April 2007 to include around 80,000 businesses with a standard consumer-credit licence issued by the Office of Fair Trading (OFT). These included some types of business that were covered by the ombudsman service for the first time, such as debt collectors and credit-reference agencies.

Also new to us were tens of thousands of firms with a consumer-credit licence whose main line of business is not the provision of financial services - but activities ranging from car dealerships to furniture stores. To help these businesses adapt to their new complaints-handling responsibilities, we continued to run an extensive external-liaison programme drawing on our existing consumer-credit expertise - we have long dealt with the banks and building societies who provide loans and mortgages making up 70% by value of the UK consumer-credit market.

The scope of the consumer-credit complaints we can look at was extended further from April 2008, when the financial limit under the Consumer Credit Act 1974 was removed. This meant that loan agreements above the £25,000 limit were now covered by the Act, and complaints about these could come to our service.

We are also preparing to welcome two new categories of consumer-credit licensee within our remit from October 2008 - debt administrators and providers of credit information services (credit repairers).

The coverage of our "voluntary jurisdiction" continued to expand during the year. This includes businesses who are not covered by our service by law - but who join it voluntarily. In July 2007 PayPal joined the voluntary jurisdiction, following its re-location from the UK to Luxembourg. And in February 2008 Post Office Ltd also joined.

In July 2007 we published a consultation paper on filling the gaps in our voluntary jurisdiction. This would enable Europe-based businesses to give their UK customers the protection of the ombudsman for all their financial services activities - in the same way as if those activities were carried out from the UK. This wider coverage took effect from April 2008.

preparing for further extensions to our remit

In June 2007 the Thornton review recommended that the Pensions Ombudsman should be merged into the Financial Ombudsman Service to create a single scheme for all complaints about pensions - both private and occupational, and covering advice-related and administration disputes. The government accepted this recommendation, and we have been working with relevant government departments, the Pensions Ombudsman and the Financial Services Authority (FSA) on proposals for delivering this effectively. Primary legislation to implement this will be needed in due course.

The Payment Services Directive, to be implemented by 1 November 2009, will require out-of-court complaints-handling and redress procedures to be put in place for settling disputes between payment-service providers and their users. We have been working with the Treasury and the FSA on proposals for delivering this effectively.

We have also been working with the Treasury and the FSA on proposals for extending our remit to cover disputes about the sale of travel insurance as part of a package holiday, as well as disputes involving the proposed "reclaim fund" for the unclaimed assets of banks and building societies.

working with the FSA and other authorities

We have continued to work closely with the FSA on issues that affect both our dispute-resolution role and the FSA's regulatory role. As part of this work, we agreed and published a new memorandum of understanding with the FSA. We also updated and re-launched the wider implications process that is designed to manage any overlaps between our roles in a structured and transparent way.

The OFT - as the regulator for the new consumer-credit activities within our remit - joined the wider implications process during the year. We also agreed and published a separate memorandum of understanding with the OFT.

We have worked closely with the FSA on a number of its current initiatives, including its move to more principles-based regulation. The existence of the ombudsman to deal with individual complaints is a key factor in enabling the FSA to focus on the broader picture in a risk-based way. As part of this, we worked with the FSA in preparing a consultation on proposals to simplify the complaints-handling rulebook.

Some of the changes that resulted from this took effect from November 2007 - and the rest from April 2008. We also worked closely with the FSA on its treating customers fairly initiative - and on its retail distribution review which is looking at the future market for the sale of investments and savings products.

In April 2007, following a review of how we are funded, we and the FSA announced that we would see what scope there was for moving incrementally towards a funding system that gave greater emphasis to the case fee (rather than the levy). This system would involve an increase in the number of "free" cases.

In December 2007 we consulted on proposals to increase the number of "free" cases from two to three. This change took effect from April 2008 - alongside a shift in the balance of our funding that means that 70% is now projected to come from case fees, and only 30% from the levy.

national and international role

We have maintained close relations with a number of government departments that have a close interest in what we do - including HM Treasury, the Ministry of Justice and the Department for Business, Enterprise and Regulatory Reform. We have also assisted a number of other public bodies that are responsible for redress schemes at home and abroad and that look to the Financial Ombudsman Service model in designing their schemes.

We continued to work closely and share best practice with other ombudsman schemes at home and abroad. At home we did this through our membership of the British and Irish Ombudsman Association. At the European level, we continued to work within FIN-NET, the network of European financial dispute-resolution bodies, to help improve the handling of cross-border disputes.

And at a global level, we hosted INFO 2007, the annual conference of international financial dispute-resolution bodies, attended in London by delegates from six continents. The Economic Secretary to the Treasury took the opportunity presented by the conference to announce five principles which will in future shape the UK Government's approach to financial services in Europe.

reviews

Two high-level internal taskforces worked during the year to improve aspects of our service. The work of our smaller firms' taskforce to accommodate the different needs and concerns of smaller businesses included creating a special section on our website for smaller businesses and providing our adjudicators with training, to help them meet the particular needs of such firms.

Our accessibility taskforce was set up to take further steps to ensure that our service is accessible to everyone, whatever their needs may be - and included a dedicated group looking at the particular needs of users with disabilities.

Our board is committed to a three-yearly independent external review of the service. In 2007 Lord Hunt of Wirral agreed to lead a review, focusing on whether we should be doing more to be visible and accessible to those we serve, and whether we are making the most effective use of the information and experience gained from our work. Lord Hunt's report was published in April 2008 and is discussed in the chief ombudsman's report.

The Law Commission and the Scottish Law Commission sought our help in their review of the law on misrepresentation and non-disclosure in relation to insurance contracts. We were able to let them study (under conditions of confidentiality) a range of real cases that we had dealt with. Their subsequent recommendations for a change in the law - published during the year - drew heavily on the approach that the ombudsman service takes to such cases.

engaging with stakeholders

We carry out a wide range of activities aimed at sharing our experience and knowledge with the outside world. Over the year these external liaison and outreach activities have included:

  • Dealing with 18,354 enquiries to our technical advice desk - our dedicated service for people handling complaints in the financial services sector and the consumer advice world.
  • Taking part in industry conferences and trade-shows - including roadshows and regional events run by trade bodies, professional networks and the trade press; and national trade-fairs such as the Credit Show, Mortgage Business Expo and the Financial Services Scotland show.
  • Organising visits, meetings and training for businesses and trade bodies - including a relationship-management programme involving the 36 financial services groups that each had more than 500 complaints referred to the ombudsman service during the year.
  • Meeting and training local consumer-advisers - from Aberdeen to Plymouth, Belfast to Chelmsford - to share our complaints-handling skills with front-line problem-solvers in the community.
  • Taking our exhibition stand to high-profile consumer events, including the National Wedding Show at London Olympia, BBC Good Homes at Birmingham NEC, and Glow beauty and vitality show in Belfast.
  • Speaking at seminars and conferences hosted by organisations ranging from the Money Advice Liaison Group to the Council of Mortgage Lenders.
  • Adding over 200 new pages to our website - including "my story" case studies and 99 news updates, as well as features such as video and audio clips (in mpeg and mp3-format).
  • Publishing our regular newsletter, ombudsman news, and distributing over a million copies of our consumer leaflet and other publications (including versions in over 20 languages and formats).
  • Answering media questions and providing information for publications ranging from Camping and Caravanning to Niche Personal Loans, moneysavingexpert.com to The Orcadian (in Orkney) - and taking part in programmes from BBC Breakfast to ITV Tonight, Radio Ulster On Your Behalf to Channel 5 The Gadget Show.