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annual review 2011/2012

1 April 2011 to 31 March 2012

chairman's foreword

I am delighted to be writing my first foreword to our annual review as chairman of the Financial Ombudsman Service - having taken over from Sir Christopher Kelly in February 2012. I welcome the opportunity to pay tribute to his leadership and vision during the seven years in which he was chairman - years which saw radical changes in all aspects of our work and organisation.

I have joined the service at a time when those changes are continuing and when we face significant challenges, not least in the scale of consumer demand. This annual review provides ample evidence of the scale of these challenges - and reflects a record year in many ways. We have seen higher levels than ever of incoming complaints and resolved cases - coinciding with an ambitious "change programme", focused on making our service even more effective, quick and easy to use.

Our work has been dominated during the year by complaints about the mis-selling of payment protection insurance (PPI). These complaints - which rose sharply in volume after the judicial review brought by the banks found in our favour in April 2011 - accounted for 60% of our total annual workload. The judicial review resulted in the banks accepting our approach to deciding PPI cases and the Financial Services Authority's guidance on case handling.

At the same time, media coverage made large numbers of consumers aware for the first time that they might have been mis-sold PPI policies. We received over 150,000 of these cases during the year - the highest number we have ever received in a year about a single financial product. At the time of writing, we are still receiving PPI complaints - at the rate of over 1,000 new cases every day.

To ensure we can cope with these volumes, we are rapidly expanding our case-handling capacity - and looking at streamlining the way we handle PPI cases - to make our processes quicker, without reducing standards of service or quality. Inevitably, this issue will be top of our list of challenges for some time yet.

PPI cases are not, of course, the only complaints we deal with. We cover all aspects of financial services here - and the tougher economic environment has meant more cases involving financial hardship, with more at stake both for consumers and businesses, as money gets tighter all round. I take great pride in our having resolved over 100,000 complaints during the year that didn't involve PPI. I'm also very pleased that we continued to improve our accessibility to people of all backgrounds and needs across the UK, providing a genuinely valuable service to consumers and businesses alike.

These achievements reflect great credit on people across our service. I am fortunate to have inherited an exceptionally strong executive team, led by Natalie Ceeney. But at all levels, and wherever I go throughout the organisation, I am impressed by the talent and commitment of our people - and their determination to give the best possible service to those whose complaints we handle. We are very lucky to have such people.

We are also an innovative organisation, always on the lookout for smarter and quicker ways of providing our service. Some of the key work this year has included reducing the time it takes us to resolve the most complex and entrenched cases, exploring how technology can help us reach more people, streamlining our processes to make them quicker and cheaper, and developing the expertise of our people yet further.

As the world continues to change, we remain committed to developing the ombudsman service, so that we can stay ahead. For example, we have recently consulted on a new charging structure for businesses - and on how we could publish ombudsman decisions openly and transparently. Change is a constant aspect of any forward-thinking service - and something we openly embrace here. Quite simply, we want to provide everyone who uses us with the highest-quality service for resolving disputes fairly and impartially.

The role of the board is to support and provide constructive challenge to the executive, as they take forward this work. Here, too, I am lucky to have inherited from Chris Kelly a board of strong and diverse talent, whose commitment to the tasks ahead matches that of the executive. In the coming year I look forward to working with them - and with people throughout the service - to help make our aspirations a reality. I also look forward to reinforcing our links with the financial community, with whom we have a shared interest in securing the best outcomes for our customers.

Sir Nicholas Montagu KCB
May 2012