1 April 2011 to 31 March 2012
To support our work in settling disputes between consumers and financial businesses, we feed back the lessons learned from our work to a wide range of stakeholders and customers.
This section highlights some of these stakeholder-engagement activities. There is more information about this work in our corporate plan, published in January each year.
We have regular contact with both the Financial Services Authority (FSA), as the regulator of financial services, and the Office of Fair Trading (OFT), as the regulator of consumer credit, on matters which are relevant to our role and responsibilities. During the year we have worked particularly closely with the regulators through the new joint “co-ordination committee”. This has helped to identify emerging issues that affect large numbers of consumers or businesses – and where regulatory action may be needed.
We also worked with the FSA as they finalised rules to improve businesses’ complaints-handling processes. This included raising the maximum amount of compensation that the ombudsman can tell a business to pay – from £100,000 to £150,000 – and preparing for the abolition of the “two stage” complaints-handling process which the FSA had found was inherently prone to abuse by some financial businesses.
We worked closely during the year with HM Treasury, the FSA and others on a number of changes or extensions to our remit. This included:
We have continued to work closely with HM Treasury and the FSA on issues arising from the reform of financial regulation, which is one of the Government’s key priorities. The Government’s proposals for reform were set out in its consultation paper, A new approach to financial regulation: the blueprint for reform, and confirmed in the Financial Services Bill which was introduced into Parliament in January 2012.
These proposals confirmed the government’s intention that the ombudsman service would remain independent, with a role clearly distinct from the regulator. We will continue to work closely with HM Treasury, the FSA and the proposed Financial Conduct Authority (FCA) on the implementation of these proposals.
We continue to maintain close relations with a number of government departments that have a particular interest in what we do – including, in particular, HM Treasury, the Department for Business, Innovation and Skills (BIS), and the Ministry of Justice.
We have worked closely with the Claims Management Regulator, part of the Ministry of Justice, and have reported to them trends and concerns about complaints received from claims-management companies. We continue to take part in their Regulatory Consultative Group.
We have also had dialogue with a number of other government departments – such as with the Department of Work and Pensions (DWP) on pension redress issues, and with the Department of Energy and Climate Change on redress in relation to the proposed “Green Deal”.
At an international level, we have continued to work with the European Commission on improving the availability of cross-border “alternative dispute resolution”, primarily through FIN-NET, the network of European financial dispute-resolution services. We have also worked with the Commission and the other EU institutions on proposals for a directive on “alternative dispute resolution” and for a regulation on “online dispute resolution”.
Our many stakeholders – ranging from consumers deciding whether to pursue complaints, to trade associations carrying out policy research – look to the ombudsman service to provide the information they need. And we aim to be as open and helpful as we can in making information freely available.
The Ministry of Justice extended the Freedom of Information Act to cover the ombudsman service from November 2011. Since then, we have received around two or three formal requests each week for information under the Act.
Many of the facts and figures we are regularly asked for are already publicly available through our “publication scheme”.
In September 2011 we published a discussion paper responding to the Government’s proposals to require us to publish the final decisions of our ombudsmen. Our discussion paper set out our initial thoughts on how we might publish decisions in practice – so that stakeholders’ responses to these proposals could inform the subsequent debates in Parliament.
Our stakeholders were largely supportive of publishing ombudsman decisions. They noted that increased transparency about our approach could help financial businesses and consumers alike – and prevent future complaints – while also improving our own accountability.
We are therefore continuing our dialogue with businesses and consumer groups while Parliament debates the issue, so that – whatever Parliament decides – we will be able to implement its decision quickly and effectively.
Our board asked the National Audit Office (NAO) to carry out the latest of our regular external reviews – this time with a focus on our efficiency. The NAO published its report in January 2012. It concluded that:
The NAO's report also made five specific recommendations – including more detailed work to assess how the current case-fee charging-structure affects the service’s cash-flow and funding, and quantifying more precisely the impact of a range of variable factors on the service’s “unit cost”.
We are following up on each of these recommendations – such as, for example, by reviewing our case-fee structure (see below).
In January 2012 we published a consultation paper on changes to our case-fee structure – to apply from April 2013. Although our current case-fee structure has served the ombudsman service and case fee payers well – as it is simple to understand and reasonably straightforward to operate – it has brought increasing challenges too.
The case-fee structure has, in particular, made it difficult to handle the cost pressures and financial risks brought about by the increasingly volatile demand for our service. It does not recognise that we now cover a much wider and more diverse group of financial businesses, ranging from some of the largest businesses in the UK to many of the smallest.
The consultation paper set out a proposal for a new approach – designed to better reflect the diverse needs and issues of case-fee payers, while ensuring continuing adequate funding for our work in future years.
The two key elements of our proposals are:
Taking into account the feedback we receive, we will consult again later in 2012 on the detail of the proposals to take effect from April 2013.
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:
During the year we met front-line community workers and consumer advisers at events we hosted across the UK.
94% of the consumer representatives who took part in one of these events said that it had given them a better understanding of financial problems and the role of the ombudsman – which would change the way they approached complaints in future.