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annual review 2015/2016

1 April 2015 to 31 March 2016

our insight and outreach

engaging with our stakeholders

Our relationships with people who have an interest in what we do - including regulators, financial businesses, consumer organisations, government and other experts - help us to encourage fairness and confidence in financial services.

Our conversations with our stakeholders about what we’re seeing mean we can together identify and address potential unfairness. And by sharing our different experiences and insight, we help each other to encourage fairness in new developments and initiatives - within and beyond financial services.

working with the regulators

One of our most important relationships is with the financial services regulator, the Financial Conduct Authority (FCA). In addition to setting the rules that financial businesses have to follow, the FCA approves our budget each year - as well as appointments to our non-executive board.

By keeping in touch with the FCA about the types of problems we’re seeing, we help them to see and understand emerging trends in complaints - so they can take appropriate action. We also share our insight to help the FCA build a picture of key issues facing financial businesses and their customers.

In 2015/2016 our work with the FCA included:

  • Sharing information on the complaints people were bringing to us about debt management services. In June 2015 the FCA highlighted their concerns in this area - having identified unacceptably low standards of debt advice.
  • Helping to inform the FCA’s discussions around small and medium-sized businesses’ experience of using financial services.
  • Working with the FCA as they consulted on new rules for handling PPI complaints, in light of the Supreme Court’s judgment in the case of Plevin v Paragon Personal Finance.
  • Helping the FCA prepare for the implementation of new rules relating to handling complaints and the ombudsman’s involvement - helping make sure financial businesses understand what they mean in practice.
  • Ensuring we meet the standard expected of us as a provider of alternative dispute resolution (ADR) under the new EU directive - having been approved by the FCA, in July 2015, as an official ADR provider.
  • Sharing information about the complaints we see involving financial advice as part of the FCA and HM Treasury’s Financial Advice Market Review (FAMR) - which looked to identify demand for, and potential barriers to, accessing advice. FAMR made a number of recommendations around the support we can offer in this area - which we’ll be taking forward in the coming months.
  • Supporting the FCA’s work to develop a “regulatory sandbox” - where businesses can test out new, innovative financial services including FinTech developments.

As well as the financial services regulator, the work of other regulators has an impact on our service. In particular - given the stubbornly high level of claims management activity - we continue to talk to the Claims Management Regulator (CMR), part of the Ministry of Justice.

This year, our work with the CMR included:

  • Regularly sharing with the CMR the numbers and types of complaints that claims managers are referring to us - as well as examples of where claims managers’ level of service is hindering our ability to sort out complaints.
  • Contributing to the CMR’s bulletins for claims managers - helping us to share important messages affecting large numbers of potential and current complaints. For example, we used the bulletin to set out how we look into the concerns people raise about packaged bank accounts - stressing that claims managers need to reflect seriously on the complaints they’re choosing to pursue.
  • Sharing our insight as part of Carol Brady’s review of claims management regulation. We’ll be supporting the FCA during the transition of claims management regulation from the CMR to the FCA - which was confirmed in the Budget in March 2016, in line with the review’s recommendations.

engaging with financial businesses

Our regular constructive conversations with financial businesses help us to identify potential concerns before they escalate. As in previous years, some of these conversations took place in our industry steering group meetings - where we meet at a senior level with businesses and trade bodies representing specific financial services sectors.

We also kept in touch with hundreds of people at businesses and trade bodies through our regular industry email newsletter. This includes operational news, pointers on our approach to complaints and opportunities to engage with us.

As we’ve continued to develop our service this year - including improving our IT and making our processes more flexible - we’ve been talking regularly to businesses about the practical impact of this on how we work together. During the year we strengthened our front-line contact with businesses - to ensure we’re identifying and overcoming any challenges as soon as possible.

Since July 2015 - as we explain in the section sorting things early on - we’ve been able to get involved with complaints at an earlier stage, following changes to the complaints handling rules. We’ve continued to engage with businesses as we put this into practice - as well as helping to address questions about further upcoming rule changes around handling complaints and referring customers to us.

Throughout 2015/2016 we also met businesses and trade associations face to face at a number of national and regional meetings and events. These included local business networks, trade body forums and our own practical events focusing on specific problems we’re seeing.

For example, in July 2015 we brought together financial businesses and experts in vulnerability to share perspectives on treating vulnerable customers fairly. This followed FCA’s challenge to businesses earlier in the year to review their approach to vulnerable customers.

Nick Bush: @finanombuds great to #meettheomb and other financial services people today with challenges of serving vulnerable customers

As we explained in August 2015’s ombudsman news, vulnerability may be caused by one-off events, including losing your home. We followed this up in November 2015, when we met lenders to discuss how to identify and prevent problems - including where customers are, or risk becoming, vulnerable.

@BSABuildingsSOC: Close to home - mortgages and the Ombudsman. New guest blog from @financialombuds. Take a look: #BuildingSocieties

supporting small businesses

Small financial businesses account for only a fraction of our workload. And many small businesses - over many years of trading - have never had a customer complain to us. More than nine in ten of the businesses we cover didn’t pay any case fees at all this year.

Even though this is clearly positive news, it means that the people running these businesses might not know much about us - and may have specific questions about what would happen if one of their customers did contact us.

So this year we continued to run our nationwide programme of free workshops, where people from local firms can discuss fair answers to real-life case studies, find out the practicalities of how we work, and put their questions directly to our ombudsmen. During the year more than nine in ten of the people who met us face to face this way agreed they got clear, useful answers to take back to their business.

Paul Thompson @Pubfinance: Great morning with @financialombuds at #meettheomb Learnt a lot about complaint handling (should we ever have one!)

We tailor our events to make sure we’re addressing the issues where small businesses tell us they need the most support. This year small businesses often asked us about our approach to suitability - and so we’ve continued to focus on this area. As well as debating case studies at our workshops, our ombudsmen answered questions at a number of events hosted by trade associations - and featured in a “myth busting” video for small businesses.

We also make sure that both ombudsman news and our online resources reflect questions and concerns that businesses are raising with us. Based on what we were hearing, during the year we used these channels to give clarity around new complaints handling rules - and what they meant in practice for businesses and the ombudsman.

In 2015/2016 we continued to offer free phone and email support for people working on the front-line of complaints. There’s more about what this helpline does to resolve problems informally in the section sorting things early on.

which of our support services businesses valued most

ombudsman news 24
our website (including our online technical resource) 19
our advice desk 26
other publications 16
events and seminars 16

working with consumers and consumer representatives

Alongside our engagement with the financial services sector, we regularly talk to national consumer organisations and third-sector experts - including Citizens Advice, Trading Standards Institute, Which? and Age UK. In 2015/2016 these conversations covered issues ranging from PPI and the impact of pensions reforms, to complaints related to age and vulnerability.

As we explain in the section who complained to us, we carry out research to find out who is - and isn’t - using our service. This helps to inform our awareness-raising activities - from how we could work proactively with different media, to where it might be effective to meet consumers directly.

This face to face work helps us to engage with people who may be put off by the prospect of a “complaints process” - and allows us to give practical answers and support, to stop people’s worries unnecessarily escalating into formal complaints.

So in 2015/2016 we continued to take part in a range of national and local events - including the 50+ show at London Olympia, the Balmoral agricultural show in Northern Ireland and the disability lifestyle exhibition, Naidex, at Birmingham’s NEC.

We also looked for new ways to make our service as accessible as possible - giving people a further, face to face channel for contacting us at Birmingham’s Bullring shopping centre. There’s more about this in the section sorting things early on.

Citizens Advice MCR @ManchesterCAB: Great to have Jade and Rosh from @financialombudsman back from another day of workshops - really informative, thank you! #meettheomb

We also work directly with trusted consumer advisers - who provide a wide range of valued front-line support to millions of people across the UK. This helps us to reach people who, when faced with a problem, feel more comfortable talking to someone they know in their community - rather than approaching an “official” organisation.

One way we do this is through our own national programme of free workshops for front-line advisers - including Citizens Advice bureaux, local charities, trading standards officers and community groups.

In 2015/2016 we met hundreds of advisers at our practical workshops across the UK - with more than nine in ten people agreeing that we listened and shared information that would help their organisation.

We were also invited to a range of local networks and gatherings of consumer representatives - ranging from foodbanks to pensioners’ forums - to hear about the issues facing local communities, and to share our own perspective on resolving and preventing problems.

During the year - having previously told us about problems with payday lenders - front-line advisers increasingly asked about our approach to guarantor loans, hire purchase agreements, and “rent to own” arrangements to pay for furniture and appliances.

Financial Ombudsman @financialombuds: Chatting with @CaerphillyCAB @talkmoneyuk & @StroudCAB about the vishing scams & how we can help victims living around #Cardiff #meettheomb

We’ve also worked together with elected representatives. This included taking part in round-table events in Westminster, hosting a number of constituency drop-in sessions, and our chief ombudsman meeting Members of Legislative Assembly (MLAs) in Stormont.

We’ve continued to provide regular information about complaints we’ve been seeing - to help elected representatives build a picture of the issues affecting their constituency. And we kept in touch with a number of MPs who’d asked us to keep them updated about particular constituents’ complaints.

sharing our insight nationally and internationally

Because of the volumes and range of complaints we’ve seen over fifteen years, we’re often asked to share our insight at a national and international level. And throughout 2015/2016 we continued to give our independent perspective on specific areas of financial services.

For example, each year we receive a number of complaints involving suspected insurance fraud. One of our lead ombudsman was a member of the Insurance Fraud Taskforce - alongside representatives of insurers, brokers and consumers. In January 2016 the taskforce set out recommendations aimed at raising awareness of fraud and improving consumer confidence in insurance.

As we explain in the section the types of problems we’ve seen, since April 2015 people have had greater flexibility around accessing their pension pot. We contributed to HM Treasury’s consultation on pension transfers and early exit charges - providing information about the small number of enquiries we’re receiving in this area.

In March 2016 our chief ombudsman answered questions from the Public Accounts Committee at the House of Commons - as the Committee looked into mis-selling in financial services, following the National Audit Office’s review of this issue.

Our work involves regular engagement with government ministers - including those from HM Treasury and the Department for Work and Pensions. During the year we continued to provide insight into the numbers and types of complaints we see about different issues. We also responded to questions from individual MPs - some in their capacity as members of all-party groups with an interest in our work, including groups relating to debt and personal finance.

We also engage with national organisations whose roles aren’t primarily related to financial services, but are relevant to our own work. This year - as a service set up as an alternative to the courts - we shared our insight and experience with a number of legal bodies.

For example, we shared our experience of resolving complaints informally with HM Courts and Tribunals Service. We talked to the Legal Services Board about how we ensure our service is accessible, as they looked to improve access to legal services. And we helped to inform the Law Commission’s review of Bills of Sale - providing information about the problems we see in this area, which includes logbook loans.

In July 2015, the EU’s directive on Alternative Dispute Resolution (ADR) came into force - meaning businesses and their customers in all sorts of sectors should have a channel for sorting out problems out of court. As part of implementing the directive in the UK, this year we were approved as an official ADR body within the EU - with the FCA as our “competent authority”.

By the point the directive came into force, we’d already been carrying out ADR activities for fifteen years. Drawing on this experience, we contributed to research by the Department for Business, Innovation and Skills (BIS) into ADR and how it could be improved. And we’ve been able to support other people looking to set up and improve their own ADR schemes - which this year included those in Italy, Armenia and the Channel Islands.

During the year we talked to the EU Commission as it prepared to launch its online dispute resolution platform - and ensured we were ready to receive enquiries through this channel. The platform - which was launched in February 2016 - aims to help people across the EU who’ve had problems buying goods and services online to find an appropriate out-of-court dispute resolution scheme.

We also continued to engage with other ADR schemes through our membership of Financial Dispute Resolution Network (FIN-NET), International Network of Financial Ombudsman Schemes (INFO) and the Ombudsman Association. These international networks help out-of-court schemes like ours to share good practice and innovation - including how to refer customers to each other efficiently.

working openly - encouraging fairness

We want our stakeholders to use our insight and experience to help prevent things going wrong - and to have confidence in our service. So we’re committed to working openly - sharing our approach to the problems we see, and being transparent about how we work.

sharing our insight and approach

We know that financial businesses rely on the information we provide about problems we’ve resolved - to help ensure they’re treating customers fairly. Consumers may also be interested in how we look into particular types of problems - so they can resolve things themselves or make a call about taking things further.

This year we published a further eight issues of ombudsman news- our regular newsletter explaining how we’ve fairly and practically resolved different types of complaints. We’ve now published 132 issues of ombudsman news - which is subscribed to by 14,000 people.

In 2015/2016 we shared our insight through ombudsman news into complaints relating to a number of themes - including vulnerability, relationship breakdown and younger people. We also continued to cover specific topics, including problems with cars, interest-only mortgages and unregulated collective investment schemes (UCIS). And supporting our conversations with our stakeholders, we’ve used ombudsman news to update people on developments and improvements to our service.

We publish regular complaints data about the problems we’re seeing - giving quarterly snapshots in ombudsman news, and six-monthly information on our website about specific financial businesses.

Since January 2016 we’ve also provided information about the number of problems we’ve sorted out at an early stage - before the businesses involved have investigated. As we explain in the section sorting things early on, this is something we’re able to do under new complaints handling rules that have applied since July 2015.

As we highlight in the section the types of problems we’ve seen, during the year we’ve continued to receive complaints arising from scams including phone fraud. After reviewing these cases - and identifying the key issues behind the complaints - we published our insight into what we were consistently seeing go wrong. As part of this, we suggested how businesses and their customers could reduce the risk of scams, and respond to them more effectively if they do happen.

In August 2015 we published our insight into the mismatch in expectations that can happen between small businesses and financial providers - following a review of the complaints that small businesses had been referring to us.

And in November 2015 we contributed to wider discussions around age discrimination - reflecting on the different interpretations of rules and guidance in this area, the complaints we were seeing, and our conclusions on how problems could be avoided.

Based on what we know people are looking for on our website, this year we updated our online resources to explain how we sort out problems with motor finance and motor insurance, payday loans, credit broking and equity release.

And using feedback from visitors to our website, we reviewed our frequently asked questions - and improved the accessibility of parts of our website where we share our approach to complaints. Keeping our online resources accessible is particularly important as an increasing proportion of people - nearly 40% this year - engage with them using mobile devices.

publishing our ombudsmen’s decisions

Since 2013 - as set out in the Financial Services Act 2012 - we’ve published all of our ombudsmen’s final decisions on our website. This year we added around 35,000 decisions to our online database - meaning we’ve now published 100,000 in total. After gathering feedback from people using the database, we’ve made improvements to the search facility and we’ve made it easier to use on mobile devices.

freedom of information

We’ve been covered by the Freedom of Information Act since 2012. So if people can’t find what they’re looking for from the information we’ve already published, they can make an official request for it.

This year we received 650 such official requests from journalists, researchers and members of the public. We provided detailed statistics about the problems we see, guidance on our approach to different types of complaints, as well as information about our organisation and how we use our resources.