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annual review 2014/2015

1 April 2014 to 31 March 2015

our insight and outreach

Our relationships with our customers and stakeholders – the people who use and have an interest in our service – underpin everything we do. As well as sharing what we learn from resolving complaints and concerns, we ask for formal and informal feedback on the work we do.

This chapter highlights the wide range of people we engaged with during 2014/2015.

working with the regulators

Our primary “official” relationship is with the financial services regulator – the Financial Conduct Authority (FCA). We work continuously with the FCA to help make sure that financial services are fair for everyone involved. The FCA also approves our plans and budget each year.

If we decide a business has acted unfairly, we’re sometimes asked by their customer why we haven’t fined or punished the business. We always explain that our role is about making sure individual customers aren’t worse off as a result of a financial business behaving unfairly. We also explain that we talk to the FCA about what we’re seeing on an ongoing basis.

Our regular conversations help the regulator to decide how to take wider action where appropriate – as well as to spot issues early on - so they don’t escalate further.

In 2014/2015, our work with the FCA involved:

  • Establishing a new relationship with the FCA in the area of consumer credit, which prior to April 2014 was the responsibility of the Office of Fair Trading.
  • Passing on the concerns that we were hearing about specific products and services. This year, for example, our insight helped to shape new rules on payday lending and credit-broking.
  • Helping to identify businesses selling regulated insurance products without authorisation – by sharing information about the concerns we were hearing.

As well as the financial services regulators, we also work with other regulators – where their activities have an impact on our own customers and operations.

For example, we share information with the Claims Management Regulator – part of the Ministry of Justice – about how many and what type of complaints claims managers are referring to us. We also notify the regulator if we see that claims managers aren’t complying with rules or are behaving in a way that’s unfair for consumers.

Building on our work with the Claims Management Regulator in previous years, our insight this year helped to shape their new, stronger Conduct of Authorised Persons Rules – which they published in October 2014.

Each year a number of people tell us they feel they’ve received a poor level of service from a claims-management company – and ask us who they can appeal to. In previous years, we had to explain – to people’s disappointment – that claims managers weren’t currently covered by an ombudsman. However, the Legal Ombudsman took on this role in January 2015 – and we’ve since directed consumers to them.

our national and international role

Because of our years of experience – and the insight we have into consumers’ lives and the way they interact with businesses – we’re often asked to share our knowledge. This includes working with official bodies and organisations whose activities have an impact on consumers, on financial businesses, or on the wider world of “disputes” and complaints.

During the year, our chief ombudsman was twice invited to share our insight with the Treasury Select Committee – contributing to two parliamentary enquiries. In July 2014, our chief ombudsman talked to the committee about the complaints small businesses refer to us about larger business lenders. In October 2014 our newly-appointed chief ombudsman, Caroline Wayman, answered the committee’s questions about the treatment of financial services customers.

We also met individual MPs over the year – including government ministers from HM Treasury and the Department for Business, Innovation and Skills (BIS) – to talk about wider issues such as access to financial services for people with disabilities.

And we met MPs and their caseworkers across the country to talk about the problems their constituents face in financial services and how the ombudsman can help locally.

As well as meeting parliamentarians face to face, in November 2014 we gave written evidence to MPs considering the proposed new Insurance Bill – which is intended to make insurance contracts fairer. And given the number of people we hear from who are in financial difficulties, we gave evidence to the London Assembly Economic Committee as they looked into the scale of personal debt problems.

We also contributed to the consultation on the creation of the Flood Re scheme – a not-for-profit flood reinsurance fund being set up by the government and insurance industry sector.

We have been involved for some years now in the government’s work to interpret and implement the EU directive on out-of-court, “alternative dispute resolution” (ADR). In June 2014 we responded to the government’s consultation on the directive. As we explained in last year’s annual review, the directive sets EU-wide standards for ADR that will apply from July 2015.

As the largest provider of consumer ADR in the EU, we fully support the aims and standards set by the directive. We continue to work with BIS (the government department responsible for implementing the directive in the UK) and with the FCA (as a "competent authority" under the directive) to ensure we meet the directive’s requirements of an “official” ADR provider.

The new, more flexible ways of working we have developed over the past few years complement and contribute to our preparations for the directive.

We also share our knowledge and experience with other UK ombudsmen and dispute-resolution services through our membership of the Ombudsman Association.  Our chief ombudsman is a member of the executive committee – which meets six times a year. And over the year we hosted a number of events and seminars for members. Through promoting good practice, the association aims to ensure that alternatives to the court remain relevant and fair.
We sometimes hear from people who are having problems with a business based outside the UK. We generally can’t look into these complaints ourselves – but we try to make sure that the consumer is signposted to the right organisation to help them.

This is why we have close links with other ombudsmen and similar services through our membership of FIN-NET  – a European network of out-of-court financial complaint schemes. We are also members of INFO, a worldwide network of financial ombudsman schemes.

As well as maintaining relationships with existing schemes, we also share our experience with other countries in the process of setting up new ombudsman schemes. Over the year, this included new schemes in South Korea, Cyprus, Malta and Italy.

working with national consumer organisations

We understand that when faced with a problem, people don’t always want to approach “official” bodies – but instead seek advice from organisations that were set up to represent and protect consumers. Through regular conversations with organisations like these, we make sure we’re aware of – and understand fully – issues that consumers are concerned about.

During the year, we met with national consumer bodies including Which? and Citizens Advice. We also host six-monthly meetings with a wider range of consumer organisations from across the UK – so we can compare the problems we are each seeing, and find ways to prevent them growing.

These conversations support our outreach work with trusted advisers in communities across the UK – sharing insight and experience with people that others turn to for help. There’s more information later in this chapter about how we’ve listened to and supported consumer advisers this year.

working with the financial services sector

To sort out consumers’ concerns and complaints effectively, we rely on an open, pragmatic relationship between our own frontline staff and those of the businesses we cover. However, we recognise that many of the individual cases we see involve issues that are relevant to a number of other complaints. So we also need to talk to businesses at strategic level.

Each year we regularly meet the largest businesses – whose customers account for the majority of the concerns we hear – to raise and sort out potential problems before they become widespread.

One way we do this is through our steering group meetings with larger businesses in the banking and insurance sectors, as well as with trade associations. At these meetings, the chief executives of these businesses discuss major trends and issues – including our plans and budget – with our chairman and chief ombudsman. Between them, the different groups met four times this year – and we publish the minutes of their meetings on our website.

We also regularly share operational information with businesses about the types of complaints their customers are referring to us. If we receive large numbers of complaints arising from a single event – for example, a glitch with online banking – we can help businesses to put things right quickly and fairly for all the affected customers. And businesses can use our insight to identify more generally where they could handle complaints better – and stop problems arising in the first place.

This year we also continued to run our industry liaison panel – made up of 600 financial services practitioners and representatives from more than 40 trade associations. We share our news with the panel through a regular email newsletter – and encourage them to reply with any questions or issues they need our support with.

Compared with the largest financial services groups, we receive relatively few complaints about smaller financial businesses. But we understand that this means smaller businesses may have particular concerns about what to expect if one of their customers asks us to step in.

So every year our outreach team works closely with smaller businesses, their trade associations and other business groups across the UK. This includes regularly visiting regional networks and complaint forums to talk about our role – and to hear what businesses may be concerned about.

We also run our own meet the ombudsman seminars all around the UK, where smaller businesses can learn more about how we work – and ask the ombudsman their questions face to face. And we host a forum for representatives of smaller business trade associations – an effective way for us to:

  • Hear their members’ views
  • Share our approach to sorting out problems before they escalate to complaints
  • Explain what we do in the context of their different priorities and concerns.

During the year we took part in events for smaller businesses in:

  • Altrincham
  • Birmingham
  • Bradford
  • Bromsgrove
  • Colchester
  • Crawley
  • Darlington
  • Derby
  • Edinburgh
  • Glasgow
  • Hull
  • Ipswich
  • Maidstone
  • Middlesbrough
  • Mold (North Wales)
  • Newry
  • Perth
  • Preston
  • Reading
  • Richmond
  • Sheffield
  • Southampton/Portsmouth
  • St Albans
  • St Austell
  • Stockport
  • Swansea
  • Taunton
  • Watford
  • Woodford Green

97% of people from smaller businesses who met us at one of our events across the UK said it had given them a better understanding of complaints handling and the role of the ombudsman – which would change the way they approached customer complaints in the future.

In our independent role, we’re in a position to hear the views of the different parties that can be involved in complaints. This means we can take a wider view – and take steps to address issues that these different parties are concerned about. For example, we explain to businesses how we try to work efficiently with claims managers – while meeting regularly with claims managers to help them understand our approach and procedures. 

working openly

We know that many businesses and organisations rely on the information we share – as they use it to improve the way they work. And as Europe’s largest alternative dispute-resolution service for consumers, many researchers, students and members of the public take an interest in how we do things.

Over the year, we received around 500 freedom of information requests. The topics we were asked about ranged from details of how we deal with certain types of complaints, statistics relating to our outreach work, and how we spend our budget.

But we’ve always tried to publish as much as we can about our work and the issues we deal with – long before we had responsibilities under the Freedom of Information Act, which has applied to us since 2011. So if someone has a question about our service, it’s likely that they can easily find the answer on our website.

Over the year we published eight issues of our regular newsletter, ombudsman news – covering topics ranging from equity release and “alternative” redress in PPI, to powers of attorney and complaints from people living in rural communities.

We have now published 124 editions of ombudsman news – all of which can be searched online. Through the practical case studies we include in each issue, we aim to clarify our approach to different types of complaints – so people can resolve them fairly without us having to get formally involved.

More than 12,000 people are currently signed up to get their regular free copy of ombudsman news. This includes financial services professionals, consumer representatives, MPs, journalists, as well as other people with an interest in putting right problems and complaints. Feedback also suggests that, on average, every ombudsman news reader passes it on to at least two other people.

Another way we work openly is by sharing our approach on our online technical resource. This part of our website explains how we look into different types of complaints – helping people to resolve them at the earliest possible stage. This year we added information ranging from comprehensive guidance on settling private medical insurance complaints, to pragmatic tips for businesses on avoiding problems with powers of attorney.

To keep our customers up to date with the wider work we do, we also regularly update our website with news about our outreach work and events. During the year we added 220 of these news updates to our website. We also use our website to make “official” announcements – for example, when we consult on and finalise our plans and budget each year.

publishing ombudsman decisions

Since the Financial Services Act 2012 came into effect in April 2013, we have been required to publish all of our ombudsmen’s final decisions (apart from in cases where it would be inappropriate to do so).

Two years on, we have published just over 60,000 decisions on our website in total. Our online “decisions database” can be searched by product type, outcome and key words. 

sharing our experience face to face

Our outreach work with the businesses and consumers who use our service – and the organisations that represent them – is a key part of our commitment to sharing our experience with the outside world.

As our eyes and ears “on the ground”, our outreach team meet face-to-face with the people who use and fund us. Listening directly to our stakeholders’ different views and concerns – about financial services, our work and wider issues – helps us quickly understand where we can support them.

In 2014/2015 our outreach work included:

  • Continuing our relationship-management programme with the largest financial services groups – as well as our industry steering group and our industry panel.
  • Organising conferences for larger businesses and claims managers – covering specific issues where they might need support, including PPI, motor insurance and financial hardship.
  • Running 23 tailored workshops for smaller businesses – who tend to sort out any problems without our involvement, so aren’t always familiar with how we work.
  • Visiting trade associations, business forums and other professionals with an interest in our work – including independent financial advisers, compliance consultants, consumer credit providers, pawnbrokers and credit union staff.
  • Hosting our forum for trade bodies and other representatives.
  • Speaking at events we were invited to – by organisations ranging from Age UK and Macmillan Cancer Support, to the Association of Professional Financial Advisers, the Personal Finance Society and local branches of the Chartered Insurance Institute.
  • Running 33 training days for trusted advisers in communities across the UK – and hosting our six-monthly consumer liaison forum for representatives from consumer groups.

During the year we visited community and advice workers to provide training and support in:

  • Belfast
  • Birmingham
  • Bradford
  • Bristol
  • Cambridge
  • Conwy
  • Crewe
  • Dunbarton
  • Dundee
  • Edinburgh
  • Glasgow
  • Gravesend
  • Hull
  • Ipswich
  • Leeds
  • Littlehampton
  • Loughborough
  • Maidstone
  • Manchester
  • Milton Keynes
  • Newcastle
  • Nottingham
  • Oxford
  • Perth
  • Plymouth
  • Omagh
  • Scunthorpe
  • Stamford
  • Stockwell
  • Tonbridge
  • Warrington
  • Watford
  • Worthing

As well as our work with government departments and parliamentary committees, we also meet a number of MPs who take a particular interest in what we do. This is generally either because one of their constituents has asked them to step into a complaint, or because they are a member of a relevant parliamentary group – for example, the all-party parliamentary groups on ageing and older people or on debt and personal finance. 

During the year we:

  • Responded to more than 500 written enquiries from MPs – ranging from questions about how we are funded to questions asked on behalf of their constituents.
  • Answered 654 questions from government ministers.
  • Ran and co-hosted local events for MPs and their caseworkers – from our own practical workshops to constituency “drop-in” surgeries, some held at local supermarkets and food banks.
  • Supported the work of other organisations in Parliament – for example, we attended an event with Alzheimer’s Society, Mind and the UK Payments Council to discuss disability and financial services.

Each year we ask businesses what they think about the way we work with them – and which of our support services they value the most.

which of our support services businesses valued most %
our advice desk 25
ombudsman news 23
our website (including our online technical resource) 19
other publications 17
events and seminars 16
queries businesses raised with our advice desk %
our approach to insurance complaints 39
our casework procedures 31
our approach to banking and credit complaints 23
our approach to investment complaints 5
our approach to PPI 2

our advice desk

Our consumer helpline helps consumers trying to resolve their own complaints. On the other hand, our technical advice desk helps people whose job involves sorting out consumers’ problems. These include complaints handlers in financial businesses, professional consumer representatives, and local community advice workers.

The informal steer we give at this stage isn’t binding – because we can’t make a fair decision without hearing from both sides. But by giving a first, early view on a situation, we can often help avoid an “official” complaint reaching us later on.

Over the year our advice desk gave more than 21,000 answers – from practical tips to detailed technical information. In the most recent of our regular feedback surveys, 95% of callers said that we’d given them the answer they needed to move the situation forward – and nearly everyone said that they would call again.

Although we received slightly fewer individual enquiries this year, the enquiries we did receive were generally more complex. We hope this means that businesses and consumer representatives are learning from our previous answers – and only need our help with situations that are very complicated or that they haven’t come across before.

The work of our advice desk informs and supports our wider outreach work. By monitoring the types of questions we’re being asked at the front-line, we can spot wider issues and concerns early on – and take steps to address them through tailored workshops or higher-level conversations.

up in smoke

An insurer phoned our advice desk about a customer whose chimney had been infested with bees. On the advice of a pest control expert, the customer had lit a fire in his fireplace to smoke them out – but hadn’t realised that his chimney was blocked.

The smoke from the fire had come back into the house, damaging the furniture in his living room. The insurer had told the customer that they wouldn’t pay out – because he wasn’t covered for damage caused by pests. The customer wasn’t happy about this.

We explained to the insurer that the ombudsman would consider why the exclusion had been put there in the first place. We pointed out that the damage hadn’t been caused by pests – it had been caused by the smoke. The customer may well have lit a fire in his chimney anyway, and the same damage would have happened.

The insurer agreed that the exclusion probably shouldn’t apply in this case – and said they’d reconsider their decision.

one size fits all

We noticed that we’d received several, similar calls from complaints handlers working for a particular bank. These related to complaints where the bank didn’t necessarily agree with what their customer was saying. But where the bank hadn’t had any evidence readily available to back up their side of the story, they had simply been paying each of these customers £40.

We told the bank that this “tick box” approach to compensation didn’t sound right at all. They needed to make sure they were investigating each individual complaint thoroughly and thoughtfully. Unless they really considered the impact of what had happened in each individual customer’s case, it was unlikely that their compensation would be – or feel – fair. 

We also reminded the bank that we make our decisions on the balance of probabilities – so we could take a view on a situation even where there wasn’t much evidence.

The bank later fed back to us that they were improving the way they considered complaints – to make sure they kept all the records they might need, and to ensure they put things right in a way that was appropriate in each individual complaint.

gold standard

A pawnbroker phoned for our help with an unhappy customer. She explained that this was the first complaint she’d received. While she was establishing what she’d need to do, she’d remembered a conversation she’d had at her trade body’s conference with someone from the ombudsman’s outreach team – about the support we could offer smaller businesses.

The pawnbroker explained that a customer had borrowed money against some bespoke gold jewellery – but hadn’t paid the money back when the agreed time was up. According to the terms of the agreement, the pawnbroker could sell the jewellery two weeks after she’d sent the customer a “notice of sale” letter. After two weeks, the pawnbroker had sold the jewellery. But it turned out that she hadn’t actually sent her customer a letter – and the customer had made a complaint.

The pawnbroker told us that this had been a genuine mistake – and that she’d already apologised. Thinking about how to put things right, she’d looked at how much money the customer had originally received – and how much they would have had to pay back with interest. She said she was considering letting the customer keep the original money, as well as waiving the interest completely. And she was also considering paying the customer the current cost of replacing the items.

We told the pawnbroker that this seemed like a reasonable offer. It put the customer in the position they’d be in if the mistake hadn’t happened. And waiving the interest showed that the pawnbroker recognised the upset of losing the bespoke items.

A week later, the pawnbroker phoned back. She said that after talking to us, she’d phoned the customer to explain how she wanted to put things right – before sending a “final response” letter. The customer had accepted the offer. The pawnbroker thanked us for being so reassuring – and said that she’d changed her business’s system so that “notice of sale” letters were sent automatically. And if a letter hadn’t been sent, the system wouldn’t allow the item to be sold during the two-week period.