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annual review 2009/2010

1 April 2009 to 31 March 2010

chief ombudsman's report

It is ten years - almost to the month - since the separate ombudsman schemes and complaints bodies came together under one roof to create the new single Financial Ombudsman Service.

At that time the separate schemes - including the old banking and building societies ombudsmen, the insurance ombudsman and the investment ombudsman - together employed around 350 staff and handled some 25,000 cases a year. Ten years on, in the year recorded in this annual review, we had over 1,000 staff and settled more than 165,000 cases.

People today can be quite surprised when reminded that ten years ago there was no ombudsman for most complaints about mortgage and insurance broking, travel insurance sold with a holiday, or consumer credit - exactly the areas where so many people can be most affected if things go wrong.

Now, it is broadly taken for granted that the ombudsman service pretty much covers all things to do with consumers' finances. So much so, that the recent widening of our remit to cover complaints about "sale and rent-back" schemes, "reclaim funds" and money-transfer operators has generally been greeted as no more than procedural tidying-up around the edges.

In the last ten years, the Financial Ombudsman Service has handled six million enquiries and resolved almost a million complaints. Nearly a third of these cases have been complaints about mortgage endowments. More recently, high volumes of complaints involving the sale of payment protection insurance (PPI), current accounts and credit cards have featured heavily, and are covered in detail elsewhere in this annual review.

In fact, according to research published in October 2009 by the European Commission, the UK's Financial Ombudsman Service now handles three quarters of all disputes settled out of court by ombudsmen and official complaints schemes in the UK and two in five disputes settled out of court throughout the European Union (EU) as a whole. This huge upward shift in volumes of work - and the continuous volatility as surges of different types of complaints rise and fall - has been an ongoing challenge for the Financial Ombudsman Service.

Joining as the newly-appointed chief executive and chief ombudsman on the tenth anniversary of the service, I am struck that in the face of this remarkable hike in scale - an average increase in workload of 20% every year - the ombudsman service has still been able to remain true to the ambitious aims published ten years ago this month.

These aims included commitments to: provide consumers with a free one-stop service for dealing with disputes about financial services; resolve disputes quickly and with minimum formality; offer user-friendly information as well as adjudication; promote the prevention of complaints as well as their resolution; be cost-effective and efficient; be accessible to disadvantaged and vulnerable people; and be trusted and respected by consumers, the financial services industry and other stakeholders.

These aims and values hold as true today as they did ten years ago. But the scale of our current operations - now forecast to continue at record levels, with our caseload expected to break through the 200,000 figure - means that the way in which we meet these objectives has to evolve and change.

As well as reflecting the structural changes needed to support an organisation that is now four times larger than it was ten years ago, and a workload that is eight times bigger, we need to take account of the fact that the world is now a very different place.

When the Financial Ombudsman Service was set up, Google and Ebay were still in their relative infancy - and the social media environment typified by Facebook and YouTube had yet to be created. Since then, we have seen some pretty seismic shifts in digital information and communication technology, which, for many people, have changed how they live their lives and do business.

These shifts have altered the way in which consumers now want to engage with service providers, and the levels of service they expect. In a world of iPhones and Twitter, consumers are becoming increasingly confident. They feel more empowered to ask questions, shop around, assert their rights, share information with others - and to complain when they are not happy. More people now expect a two-way conversation - not one-way communication. Institutions from GP surgeries to government departments, whose authority was previously regarded as unassailable, can now expect to be questioned and challenged.

Meanwhile, for those consumers who are not wired up to the internet or plugged into the latest technology, many services are becoming less, rather than more accessible. There is a very real risk that services will leave them behind.

The ombudsman service has to recognise and respond to these new challenges. More than ever before, everyone expects a service tailored to their own needs and requirements. Yet we need to do this while operating on a significantly larger scale. We have to plan our service carefully to meet the competing demands and priorities that this involves.

If the challenge of the last ten years at the ombudsman service was scaling up to increased demand, the challenge we face in the coming decade will almost certainly be to meet large-scale demand for personalised service-delivery. In the next ten years, the norm will be to provide an individual service - for more people than ever - meeting higher expectations than ever before.

One of our priorities for the coming year is, therefore, to re-examine the operating model that has worked successfully for us over the last decade - and to adjust it to meet the challenges now facing us. In today's world, efficiency and operating at low cost need to be a core part of our focus. Here we are starting from a strong base, as our unit cost compares favourably with the alternative to an ombudsman service, namely the courts. But we are committed to constantly exploring how we can be more efficient.

And efficiency is meaningless unless we offer an excellent service as well. Providing a really excellent service is what we are here to do. We have a lot of work already underway to make our service better - including changes to our processes, so that we can more quickly identify the exact types of complaint as they arrive, to ensure they are on the desk of the right expert as soon as possible.

We are also already working to reduce the length of time it takes us to allocate cases to our adjudicators and ombudsmen - so that we can resolve disputes more quickly, something that is clearly in the interests of both parties to a complaint. We will be doing some research over the summer to explore how the financial services industry and consumers with complaints would most like to interact with us in the digital age. And we are in the early stages of rolling out a more standardised and simpler way of communicating our decisions, so that everyone can see clearly what decision we have reached, and why.

At the time of writing this, I have been in post for two months. This is long enough for me to see that the foundations put in place in the last ten years are solid enough for the building work needed in the next ten years. I owe a huge debt to my predecessor, Walter Merricks, who was the first chief ombudsman and who created the service that now operates so successfully. Over the months, I will keep listening and talking to all our stakeholders about how we build on these foundations for a service of the future. I am looking forward to it!

Natalie Ceeney CBE
May 2010

video interview

chief ombudsman, Natalie Ceeney, on highlights of the annual review

photo: Natalie Ceeney CBE

video interview