our complaint-handling procedure - some modifications

towards a common process
The ombudsmen for the different financial sectors have now been together under one roof for nearly a year. All now work for the Financial Ombudsman Service – but continue to operate in the names, and under the rules, of the original schemes until the Financial Ombudsman Service’s own rules come into force at the date we call “N2”. The government has said that this will be no later than the end of November 2001.

Our customer contact division is the common point of entry for all customers, whether their complaint concerns a bank or building society or an investment or insurance firm. There are then three casework divisions. The banking and loans division carries out casework for the Banking Ombudsman Scheme and Building Societies Scheme. The insurance division and the investment division carry out casework for the other schemes.

As part of our preparations for the new regime, we are introducing common case-handling procedures, and common terminology, throughout the Financial Ombudsman Service, supported by ‘Croesus’ – a new software system. The banking and loans division will probably transfer to this new process in early May 2001 and, although some of the changes will not come into effect immediately, we will be working in accordance with the new procedures wherever they are consistent with the existing rules of the Banking Ombudsman Scheme and the Building Societies Ombudsman Scheme.

We have discussed with the Office of the Data Protection Commissioner the arrangements for holding data from different existing ombudsman schemes within a single computer system.

aimed at early resolution
We outline below the main consequences of the changes but, as you will see, most things will remain the same. Our aim remains to resolve complaints at the earliest possible stage that is compatible with fairness and correctness. This approach will be familiar to both banks and building societies. It minimises the overall cost to firms of complaints-handling, and provides certainty at an early stage. If an amicable agreement can be reached before attitudes have become entrenched, it may restore customer goodwill and confidence.

Our procedures are designed to be flexible, not process-driven, and we intend to maintain an active dialogue with both firms and customers to keep the procedures under review.

outline of the process
Here is a summary of the overall process and terminology. We have highlighted in the blue boxes the principal changes from the process that banks and building societies are used to already.

firms’ internal complaint-handling procedures
From “N2”, FSA rules will require firms to send the customer a final response within eight weeks of the date when the complaint first reached the firm (whether it arrived at the branch, head office or elsewhere within the firm). The final response must say that the person making the complaint can refer the complaint to the ombudsman within six months. If the firm cannot send a final response within eight weeks, it will still have to tell customers that they can refer the complaint to the ombudsman.

Until “N2”, the eight-week limit will not be binding. And we recognise that there are considerable process and resource implications for firms. But we will encourage them to work to the new timescales wherever practicable. This will give them an opportunity to gear themselves up in readiness for “N2”.

In some cases, eight weeks will not be sufficient for firms to resolve the complaint. In such instances, the person making the complaint does not have to bring the complaint to us immediately. It will be up to the firm to convince the person making the complaint that it is taking the matter seriously and that it really does need extra time.

Where a person making a complaint has not received a final response after eight weeks and insists on referring the complaint to us, we may decline to look at it immediately if we are satisfied that it has special features which mean the firm really does need more time. But we would not expect a firm to seek such extensions of time as a matter of routine.

For both banks and building societies
The eight-week time limit is the principal change. The Banking Code Standards Board has recommended that firms convered by that Code should aim to start following the new time limits now.

Existing scheme rules do not actually require a final response (or deadlock) letter. They only require that enough time is given for senior management to consider the complaint. In most cases, eight weeks will usually be enough, if the complaint-handling department is adequately resourced. But we encourage firms to issue a final response (or deadlock) letter, even though it is not a requirement, as it lets us know the firm’s position in relation to the complaint.

if the person making the complaint comes to us first
We will continue to encourage anyone making a complaint to complain first to the firm. But if they bring their complaint first to us, our customer contact division will refer the complaint on to the firm. If the complaint is one that the firm has not already received, the eight weeks will start when it receives the complaint from us. If the firm resolves the complaint, that is the last it will hear from us about it. We will log the complaint, but will not follow it up unless the customer comes back to us to say the complaint is unresolved.

If we receive the complaint in writing, we will copy it to the firm. If we receive it by phone, we will note the identity of the person making the complaint and the general nature of the complaint – and pass on those details on to the firm. It is then up to the firm to try and resolve the complaint. We will want to send as much as possible of this early information electronically, and we will contact firms individually about this in due course.

For both banks and building societies We already refer written complaints to them if anyone brings complaints to us first. But if someone making a complaint phones us, we currently require them to put their complaint in writing before we pass it on. However, just as firms now allow customers to do business by phone, we will allow people to complain by phone. We will then send the details to the firm, in writing or electronically

our customer contact division
Once the firm has issued a final response letter, or the eight weeks have passed, the person making the complaint can ask us to look at the complaint. Our customer contact division ensures the details are entered on our complaint form and signed by the person making the complaint. It will not investigate the complaint, but will check whether it is one that can be resolved immediately.

Where there appears to be a good chance of resolving the complaint immediately, the customer contact division will phone the firm. In other cases, where it is immediately obvious that the complaint falls outside our jurisdiction, the customer contact division will let the person making the complaint know this. Otherwise, the customer contact division will pass on the complaint to the banking and loans division as a new case.

Our assessment team
The banking and loans division’s assessment team identifies cases that can be resolved without the need for a full investigation. They will deal with any outstanding subjective jurisdiction issues (those that involve weighing the issues and reaching a subjective judgement). This includes identifying cases where the firm has clearly already offered enough to meet the complaint described by the person making the complaint.

The aim of the assessment team is to resolve as many cases as possible, consistent with the overriding principles of fairness and correctness. This may involve a caseworker seeking to broker a settlement by mediation, or perhaps taking a firmer approach and giving the person making the complaint or the firm (or sometimes both) a written initial view of the complaint and its likely outcome.

Settlement by mediation can only occur where both parties agree. An initial view is not binding – either party can ask for a full investigation. However, we may decline this request if the initial view is referred to an ombudsman and the ombudsman considers that it is correct.

For banks – They will already be used to dealing with the caseworkers in our assessment team. And they already take full advantage of the opportunity of resolving complaints by mediation. This is based on our assessment of the compensation that would be payable if the complaint were fully upheld. The initial view is an additional method – where the caseworker estimates how far the complaint would be upheld if it went on to investigation.
For building societies – At present the adjudicator deals with any subjective jurisdiction issues and any mediation, as well as dealing with the investigation. Giving these tasks to a specialist caseworker will enhance the chances of resolving some complaints early. Banks already take full advantage of this – with two cases settled by mediation for every case that goes on to investigation. The change will be introduced gradually for building societies after May.

Investigation
If the complaint is within our jurisdiction, and it has not been possible to settle it by mediation or following an initial view, it will be passed to one of our adjudicators for investigation. If the investigation brings circumstances to light that are likely to foster a settlement, the adjudicator will explore the possibility of settlement by conciliation.

Otherwise, the adjudicator will prepare a report, summarising the complaint and the outcome of the investigation. The report will include the adjudicator’s conclusions about whether the complaint should be upheld and (where appropriate) a recommendation for compensation or other redress.

As now, either party can ask for a review of the adjudicator’s conclusions. If so, the matter will be reviewed and an ombudsman will issue a final decision.

For banks – Only the terminology will change. The present adjudication becomes the adjudicator’s report.
For building societies – At present, only the terminology will change. The present preliminary conclusion becomes the adjudicator’s report. Until “N2”, this will continue to be the adjudicator’s report of the ombudsman’s preliminary conclusions. After “N2”, the report will represent the adjudicator’s own conclusions, with the ombudsman involved directly only at final decision stage.