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ombudsman news

issue 122

November/December 2014

ombudsman focus: talking business

We ask every consumer who brings a complaint to the ombudsman to tell us about their experience with us - and how we could have improved it. And every quarter, we ask complaints handlers at financial businesses - working at the front-line of addressing customers’ concerns - about their recent dealings with us. We also measure businesses’ awareness of the support services we offer, including our events, website and publications.

In this ombudsman focus, we highlight - and respond to - some of the feedback and questions raised by complaints handlers over the past six months.

“I think the person complaining should pay the ombudsman fee if the case is found in the firm’s favour. That would deter off the cuff, "standard letter" type complaints”

In every survey we run, some businesses tell us they think we should charge consumers - or claims managers - for referring a complaint to us. For example, one business suggested charging people “a nominal fee of £50 to £100”.

We understand the strength of feeling that exists about this issue - particularly among smaller businesses, who might be worried about the prospect of being charged a case fee.

But Parliament decided that a free ombudsman service underpins confidence in financial services. And like many other public services, the fact that our service is “free at the point of use” recognises that some of the people most in need of help might not be in a position to pay for it. So our view on charging consumers is very unlikely to change.

The issue of charging has become especially relevant over the past few years - when we’ve received many more complaints from consumers in significant financial hardship. For someone missing or making only minimum payments on high-interest debt, a £50 fee is clearly far from nominal. It’s also higher than many direct debit payments and money transfers, as well as many standard charges applied by financial businesses - for example, those relating to credit-broking and overdrafts.

So the result of charging a £50 “deposit” could be that people wanting to question small amounts of money see no economic sense in taking things further. And other people couldn’t afford to ask for our help - because they don’t have £50 to cover the basics of everyday life, let alone to cover a “complaining fee”. If they had £50 to spare, they might not have a problem in the first place.

“Those PPI reclaim companies are fishing. Shouldn't they have to prove the existence of a policy before wasting your and my time?”

One of the hallmarks of PPI mis-selling was that some businesses added policies to loans without customers’ knowledge. While we don’t agree that this happened in every case, a huge number of policies we’ve seen were mis-sold in this way. In some situations, people tell us they’ve been told by a business that they never had PPI - only for a policy to be traced during our investigation.

Given this - as we explained in ombudsman news issue 108 - we don’t think it’s unreasonable for people to ask if they had PPI, or to question the answer they get from a business. And although we’ve always made it clear that there’s no need for people to pay a claims management company - and we see little added value in what they do - we’ll respect people’s choice if they do so.

However, we’ve also made it clear to claims managers that some of their practices make things difficult for everyone. Since 2009 - when we first starting getting significant numbers of PPI complaints through claims managers - we’ve set out the standards we expect of them. We publish these on our PPI resource on our website.

We tell claims managers to avoid sending us or businesses generic information - for example, the same “template” letter for each of their customers - and instead to provide tailored information, specific to the individual consumer and their particular circumstances.

When this doesn’t happen, we send the paperwork back and tell the claims manager to improve it - to avoid wasting their customer’s time, our time, and that of the business concerned.

The claims-management regulator, part of the Ministry of Justice, has also taken steps to improve poor behaviour. Under the most recent version of its rules, claims managers must take all reasonable steps to ensure that PPI was sold in the first place. The regulator has also warned claims managers against abusing “subject access requests” (under data protection legislation) to obtain customer information - a practice which smaller financial businesses tell us places a disproportionate burden on them in terms of time and cost.

“My business doesn’t always have the resources to answer queries within the short timescales you give - usually 14 days”

It’s in the interests of both a business and their customer to resolve a complaint as quickly as possible. We set timeframes for replying to our questions so that, once our investigation has started, we can keep things moving forward.

But we understand that many businesses don’t have a separate - let alone large - compliance team. And even if they do, we know that it can sometimes be difficult to come up with an answer quickly - for example, if the complaint relates to something that happened several years ago, or if complex calculations need to be carried out.

If a consumer explains to us that they need longer to get back to us - for example, because they’re unwell or on holiday - then then we’ll consider giving more time. Equally, if a business fully explains the reasons why it will be difficult for them to meet our deadline, we might allow an extension - as long as there’s communication between all parties.

“My firm has only a small number of cases referred to the ombudsman each year - below the charging fee. But we get letters saying that there will be a charge”

When a business receives a letter from us saying we’re taking on a customer’s complaint, we say the case is “chargeable”. That means it counts towards the business’s total number of cases in that particular year. If the total doesn’t reach more than 25, they won’t pay any case fees.

The Financial Conduct Authority regulates 80,000 businesses - which are automatically covered by the ombudsman. But only around 5% had complaints about them referred to us last year. And of these, nine in ten didn’t actually pay a case fee - largely because from 2013/14, following extensive feedback from smaller businesses, we increased the number of fee-free cases from three to 25 each year.

If you receive a letter or email from us that you’re not sure about, the adjudicator (or our consumer helpline) will be able to explain how things stand. Or if your customer’s complaint hasn’t been referred to us, our free technical advice desk can help you sort things out fairly and informally - without the case needing to come to us at all.

“Your events all seem to be south of England or Midlands-based”

Every year, we run several conferences for larger businesses - whose customers account for a very high proportion of people using financial services in the UK. To share our approach most effectively, we hold events where we’re likely to meet as many people from these businesses as possible. And many large financial services firms employ a large number of staff in places like Birmingham, Manchester, Cardiff and Glasgow.

But it’s not the case that we hold all our events in major cities. And they’re not all conferences. In fact, the majority of our outreach work with businesses takes place on a local level - either at our own hands-on workshops for smaller businesses, or at meetings of regional groups and networks that their members invite us to.

We also host forums for trade bodies representing thousands of people running small financial businesses across the UK. Although these individual businesses might not have time to meet us face-to-face themselves, our forums are a chance for trade bodies to tell us what they’re concerned about. And the trade bodies can use their own communications channels to share our news with their members - wherever they’re based.

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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.