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complaints handling, accessibility and transparency

speech by Tony Boorman, decisions director and principal ombudsman, at the complaints seminar held by the Association of British Insurers (ABI)

London, 12 May 2009

I want to spend some time talking about our next steps on "accessibility" and "transparency". In particular, I want to ask you to consider how we can work together with the insurance sector to help meet the objective of a more accessible and transparent ombudsman service - and to enhance confidence in financial services.

First, a reminder of how we got here. Accessibility and transparency are issues that the Financial Ombudsman Service has taken seriously since it was first established. That is why the chief ombudsman proposed, and our board agreed, that we should voluntarily subject ourselves to an independent external review every three years - and should publish the results.

The first external review was commissioned in 2004. Our board asked a team from the Personal Finance Research Centre at Bristol University to look at our casehandling procedures and systems, and to examine our performance in relation to quality, consistency, process and value. The report - "Fair and reasonable: an assessment of the Financial Ombudsman Service" - concluded that the ombudsman service was:

a thoughtful, well-managed organisation that is doing a good job under difficult circumstances.

The second review was commissioned in 2007. Our board asked Lord Hunt of Wirral to focus on the accessibility and transparency of our service. As part of his review, he held meetings with a wide range of our consumers and people who had an interest in our service, including industry stakeholders.

Lord Hunt's report contained a wide range of far-reaching recommendations that have helped to set a direction of travel for a journey that we have started - but which will take several years to complete.

Our board, all of whose members are non-executives appointed in the public interest, carefully considered Lord Hunt's recommendations. Most of them were accepted. Some of the objectives were to be delivered by different means. A few of the recommendations were not accepted.

The board decided not to change the name of the Financial Ombudsman Service. The board did not accept the recommendation that we should publicly name each year the worst firm in each industry sector. And the board decided not to ask the FSA's practitioner panels to take over the work of our industry liaison groups.

In July 2008 we published policy statements, setting out our strategies on accessibility and transparency. And we established an industry/consumer discussion group to act as a sounding board as we work through the ambitious programmes that these policy statements laid out. At their suggestion, we have published a progress log [updated action-list opens in PDF format], which shows where we are up to in the key tasks.

So much I hope you already know. What I want to do today is to suggest how the ombudsman service and the insurance sector can work together to take forward this ambitious agenda.

reaching out ...

We make our commitment on accessibility clear:

Our service is for everyone. We aim to be accessible - and to meet any particular needs our customers may have.


we aim to meet the needs of our customers and stakeholders by ...
- promoting equal access to the Financial Ombudsman Service for all users and potential users;
- ensuring that we provide an accessible service to all of our customers;
- providing clear, meaningful information about what we do and how we do it to our customers, potential customers and other stakeholders, in ways that best suit their individual needs;
- identifying as early as possible any individual requirements that may need to be met in order for a customer to fully access our service; and
being responsive to changing needs and requirements.

As you will see from our reports, we are putting a great deal of effort behind initiatives at the ombudsman service to further enhance access and to remove barriers. For example, we have taken great pains to make our website user-friendly and welcoming. Information for consumers is available as normal text, easy-read, speech, video, mp3, sign language, in video and more than 20 languages.

We offer 020, 0300 and 0845 phone numbers - so that everyone can phone us at minimal cost. And, where the cost of a call is a barrier to access, we are happy to phone people back. The opening hours of our consumer enquiry line have been extended, from 8am to 6pm so far. And we have launched an online facility to register complaints outside these hours.

We are trialling a process of specialist advisers for vulnerable consumers. Conscious of the need to maintain our impartiality, this involves guiding them through our process - but not advising them on what they should complain about or what they should say.

We have no current plans to adopt Lord Hunt's suggestion that we advertise on daytime television. Instead, we have continued to implement targeted programmes to reach particular groups of vulnerable, "hard to reach" or less aware consumers, identified from our ongoing market research. And we have continued to work with consumer groups and advice agencies - in their capacity as "trusted individuals" in the community, able to "signpost" consumers to our service where needed.

Of course, the ombudsman service does not exist in isolation here. Consumers' ability to access our service will depend on a wide variety of factors - many wholly outside our control. But critically, this will depend on the steps that you as financial businesses take to handling complaints - and the accessibility and transparency of your own complaints-handling work.

Where consumers come to us before raising their complaint with the relevant financial business, we have always smoothed the path for both sides, by noting the headlines of the complaint and referring it to the financial business - while letting the consumer know they can come back to us if the financial business does not resolve the complaint.

As suggested by Lord Hunt, we have researched whether those consumers who do not come back to us - after making initial contact about a complaint - are all satisfied with the response they subsequently got from the financial business.

First the good news. Many consumers do find that, following our "signposting", the financial business they are unhappy with is ready to resolve matters. Around half of the consumers who contacted us early-on in the complaints process reported that the financial business subsequently resolved matters - and almost all of these consumers (95%) put that down to the ombudsman service's early involvement in the case.

But the bad news is that many consumers remain dissatisfied. Some say that they are still trying to sort things out with the financial business concerned, sometimes months later - and may yet seek the ombudsman's formal involvement. Many others have let the matter drop.

This is all mirrored in your own research findings - reported in the ABI Customer Impact Survey for 2008/09. Those findings show that 55% of those who complained to their insurer in the past 12 months felt their complaint had been handled in a "poor" way.

We know that relatively few consumers who contact us early-on in the complaints process - and who remain dissatisfied after their complaint has been investigated by the financial business - come back to the ombudsman service to pursue the matter formally with us (or indeed, through the courts). How should we interpret this?

I suppose we might hope that it is because the consumer's complaint was relatively trivial - and in the consumer's view "not worth it". Or that despite the consumer's dissatisfaction with the business's response, there was a developing recognition that in fact the complaint was not well-founded.

But the findings are also consistent with a sense of consumers being ground down by the complaints systems used by some firms. Certainly we see some businesses engaged in a genuine attempt to consider and resolve customer concerns effectively. But too often, we see approaches that seem more motivated by a cynical assessment that the higher the administrative hurdles placed in the way, the more customers will "drop out" of the system regardless of the merits of their complaint.

I suppose a jaundiced complaints handler might argue that discouraging unjustified complaints is no bad thing. If consumers cannot be bothered to pursue their complaint through a detailed process, then surely it was a complaint of little significance or with little justification? Three things should be said in response.

First, there is little to suggest that the complaints that are raised by this dissatisfied (but exhausted) majority are in fact unjustified. After all, if a business' complaints-handling procedures were working well, we would only expect to uphold a small percentage of cases referred to the ombudsman service. The business would have got its complaint handling right in most cases.

But in over a half of the cases we handled last year, the outcome of a consumer's complaint following investigation by a financial business was changed in favour of the consumer as a result of our subsequent involvement. In other words, it is not because most complaints are unfounded that they are not progressed.

Second, extensive processes and administrative hurdles are likely to have a particularly adverse impact on more vulnerable customers - consumers who find forms, officialdom and the law frightening. Consumers who do not write letters, or who need time to gather their thoughts. Consumers in financial hardship, for whom waiting for the compensation they are due may not be a realistic option.

These are the last consumers we should be deterring if we are serious about achieving a truly accessible service.

Third, these extended processes operated by some businesses do not deter claims-management companies. On the contrary, they provide the very environment of mistrust on which such companies thrive. It is the claims-management company, after all, that wants consumers to fear the minefields of trickery and complexity that you may have erected to deter the unprotected.

Practice here varies widely between financial businesses. Those with a dismal approach inevitably command much attention and comment from the ombudsman service - and increasingly from the regulator.

But confidence in complaining will not be achieved simply by eradicating cynical approaches and dismal complaints-handling practice. I hope we can also build a better sense of what good and excellent mean. Understanding why your customers do not pursue their complaints will be a good place to start.

opening up ...

It will also not have escaped your attention that we have announced we will start publishing business-specific complaint data in the autumn. Some of you may not like it - but our "public interest" board was unanimous.

Each six months, we will publish data for all financial businesses that had at least 30 new cases and 30 closed cases during the period - a threshold adopted to screen out data that would not be statistically meaningful.

The data will show, for each regulated financial business, the number of new cases and the percentage of closed cases where there was a change in outcome in favour of the consumer - following the ombudsman service's involvement. We will provide totals, and break these down according to the five product groups that the Financial Services Authority is adopting for its complaints return. We will also provide comparative percentages for all our cases, as a yardstick.

We agreed not to publish the first set of data until after 1 September 2009 - about a year on from when we first announced our intentions - in order to give the "contextualisation working-party" more time to see if the industry and consumer sides can agree how a wider context might be put around the figures. We can see the advantages of this in principle, but we are aware of the difficulties in achieving this in practice.

The second limb to our work on transparency focuses on our casework practice. We already publish a great deal about our casework practice, both through ombudsman news and material on our website aimed at businesses.

We are working to supplement this with yet more information about our casework, including individual decisions, so that we develop an online digest of our practice. This will grow organically over the next few years. We have identified five leading universities with a particular interest in our work, and we are in discussion with them about fostering increasing academic analysis of our approach.

I hope you will contribute to this work by letting us know your views on the priority areas for further information about our practice.

By increasing transparency in this way, I hope we will enable all interested parties to observe the real work the ombudsman service does to resolve disputes. In pushing aside the rumour, myths and half truths that seem to abound whenever our work is debated, this cannot be anything but helpful. And in so far as it shines a brighter light on those situations in the insurance sector where things are not working well, it can only help others in avoiding the same failings - and so minimise unnecessary referrals to the ombudsman service.

conclusions ...

So there is an ambitious agenda here, not just for the Financial Ombudsman Service but for financial businesses too. The ABI's work on good practice and benchmarking in complaints handling provides a promising foundation for responding to this challenge.

Some of you may agree with the objectives here - but query the timing. No one surely doubts that we face continuing difficult times given the wider economic and financial environment. Access and transparency may seem like optional extras in these circumstances.

But now is the time to build customer confidence - in the way the insurance industry responds when problems arise. So we can and should work together now, to improve access to complaints handling for consumers and to provide greater transparency about the outcomes that result.

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