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annual review 2009/2010

1 April 2009 to 31 March 2010

how we dealt with the complaints

number of cases we resolved

year ended
31 March
cases resolved
2010 166,321
2009 113,949
2008 99,699
2007 111,673
2006 119,432
2005 90,908
2004 76,704

We resolved a total of 166,321 cases in the financial year 2009/2010. This is a 46% increase on the 113,949 cases we resolved in the previous year - and is the highest number in any year since the ombudsman service was set up in the year 2000.

how we resolved the cases

The approach we take to resolving disputes is largely determined by the individual facts of each case - and by the level of formality required to settle matters appropriately.

Our preference is to resolve complaints informally - getting both sides to agree at an early stage to the views or informal settlements that our adjudicators may suggest.

But more complex or sensitive disputes may require detailed investigations and lengthy reviews, including an appeal to one of our panel of 56 ombudsmen for a final decision.

cases requiring an ombudsman's final decision

During the year, the number of cases requiring the direct involvement of an ombudsman - and a formal ombudsman decision - increased significantly. 8,674 cases had a final decision by an ombudsman in the financial year 2008/2009 - rising 24% to 10,730 cases in 2009/2010.

Around four out of ten requests for an ombudsman's final decision were made by financial businesses, and six out of ten appeals to an ombudsman were made by consumers.

Consumers aged under 45 were statistically 50% more likely to ask for an ombudsman's final decision than consumers over 45. But the proportion of men and women who did so was broadly similar. During the year consumers from the East of England and the North West were more inclined to appeal their case to an ombudsman for a final decision than consumers elsewhere across the UK.

Proportionately more cases were referred to an ombudsman for a final decision where the dispute related to pensions and investments - generally reflecting the complexity of these disputes, the larger amount of money often at stake, and the socio-demographic background of many of the consumers involved.

The increase in the number of cases where a complaint is pursued to an ombudsman decision - the final stage of our process - appears to continue a trend we highlighted in last year's annual review. This is the shift towards more entrenched disputes - with businesses increasingly taking a harder-fought and legalistic approach, and consumers becoming more demanding and less willing to concede.

This hardening of attitudes on both sides is likely to reflect the tougher economic environment, as consumers and financial businesses adapt to dealing with tighter finances.


Our rules allow us to hold public or private hearings as part of our work resolving complaints. We can also hold hearings over the phone, where this is more convenient for everyone involved.

If we are asked for a hearing by either a consumer or a business, we consider carefully what value it will add. We do not believe that hearings should be held just to allow either side to confront the other in person. Our hearings are generally as informal as possible - and held only in cases where the documentary evidence is very finely balanced and the facts of the case are at issue.

During the year we again held fewer than 20 hearings in cases where the ombudsman involved considered that it would help them get to the bottom of a case.

how we record the outcome of cases we resolve

We record the outcome of a consumer's complaint as "changed" - meaning we upheld the complaint - in cases where:

  • The financial business told the consumer in its final response that it had done nothing wrong - but after the complaint was referred to us, we decided (or the business belatedly accepted) that it had done something wrong after all.
  • The financial business's final response offered the consumer inadequate compensation - but after the complaint was referred to us, we required the business (or it belatedly agreed) to increase its offer to an appropriate level.

We record the outcome of a complaint as "not changed" - meaning we did not uphold the consumer's complaint - in cases where:

  • The financial business had done nothing wrong.
  • The financial business had done something wrong, but had already offered the consumer appropriate redress (before the complaint was referred to us).

% of complaints where the outcome changed as a result of our involvement ("we upheld the complaint")

banking and credit complaints

banking and credit complaints 2008 2009 2010
current accounts 88% 61% 20%
credit cards 86% 76% 68%
mortgages 38% 40% 37%
unsecured loans 44% 49% 48%
consumer credit 58% 45% 58%
savings accounts 40% 64% 51%
other banking services 48% 55% 46%

insurance complaints

insurance complaints 2008 2009 2010
payment protection insurance (PPI) 47% 89% 89%
motor insurance 51% 50% 38%
buildings insurance 41% 44% 43%
contents insurance 37% 41% 38%
travel insurance 38% 39% 44%
health insurance 33% 31% 35%

investment complaints

investment complaints 2008 2009 2010
mortgage endowments 32% 37% 38%
whole-of-life policies and savings endowments 40% 34% 26%
investment bonds 38% 42% 45%
pensions 18% 23% 28%
stockbroking and portfolio management 41% 42% 49%

year ended 31 March

In total we upheld 50% of the complaints we settled in the financial year 2009/2010 - compared with 57% of cases in the previous year.

Complaints we closed during the year about current accounts included some 15,000 cases that had been on hold pending the Supreme Court's ruling on unauthorised-overdraft charges.

Following that legal ruling in November 2009, we reviewed each case - and were not generally able to progress those that involved "template" or "standard letter" complaints about charges. The outcome of these cases was therefore recorded as "not changed" - meaning we did not uphold the complaints.

complaints data relating to named businesses

In September 2009 we published on our website - for the first time - complaints data relating to named businesses. This data showed the number of new complaints - and the proportion of complaints we upheld in favour of consumers - for businesses that had 30 or more new cases (and 30 or more resolved cases) in the first half of 2009.

In February 2010 we published a second set of complaints data - again showing named individual businesses - covering the second half of 2009. We will continue to publish complaints data like this every six months.

The complaints data we have released so far relating to named businesses shows that:

  • 150 or so businesses (out of more than 100,000 that are covered by the ombudsman service) together generate around 90% of our complaints workload.
  • The number of complaints relating to each individual business included in the six-monthly data has ranged from 30 to over 8,000.
  • The proportion of cases we upheld in favour of the consumer varied substantially from business to business - between 10% and 100%.

putting things right

Where we uphold a complaint in favour of a consumer, there are several ways in which we can put matters right - depending on the individual circumstances of the case. These include:

  • Telling the business to pay redress - to put the consumer in the position they would now be in, if the business hadn't got it wrong in the first place.
  • Telling the business to compensate the consumer for distress and inconvenience. We did this in 18,511 cases during the year - 24% of the cases we upheld (a similar level to the previous year) - generally awarding an amount between £150 and £500.
  • Directing the business to take specific actions, to put right what's gone wrong. This can range from correcting credit references to paying a previously-rejected insurance claim.
  • Telling the business to apologise.

We recognise that our decisions on complaints will be disappointing for whichever side doesn't hear what they wanted to hear. But whatever the outcome of an individual case, we aim to "add value" by explaining our view fairly, authoritatively and impartially.

Where we do not uphold a complaint in favour of a consumer, we aim to explain clearly - from an entirely impartial standpoint - why we believe the financial business has done nothing wrong (or has already offered appropriate redress).

Poor communication is at the root of many disputes between financial businesses and their customers. We continue to see cases where a clear, helpful and sympathetic explanation by the business - rather than a defensive and legalistic response - would have resolved misunderstandings and prevented the complaint in the first place.

We recognise that some consumers pursue complaints in an unfocused manner that may make them seem unreasonable to the business. However, a consumer's failure to present a reasoned argument does not automatically mean that a case has no merit - or that the complaint should be categorised as "frivolous and vexatious".

Nevertheless, of the 166,321 complaints we settled during the financial year 2009/2010, we concluded that 702 cases (0.4% of the total) could be categorised in that way. 677 of these cases were complaints - mostly brought by claims-management companies - relating to payment protection insurance (PPI) policies that had never been taken out. We do not charge a case fee to the business complained about where we decide that a complaint is frivolous and vexatious.


The table below shows the time it took us to deal with the complaints that we settled in the financial year 2009/2010.

We resolved 38% of complaints within three months, 67% within six months and 81% within nine months. These are all improvements on the previous year, resulting in a 10% rise in positive customer feedback on our timeliness - with half of consumers now agreeing that we settle disputes within an acceptable period of time. But this still remains a key priority for us in terms of improving our customer service - and we aim to further improve timeliness next year.

We were able to improve the average time we take to resolve cases by recruiting 300 additional adjudicators during the year, together with further contract and outsourced staff. This also gave us more flexibility to cope with volatility in complaint volumes during the year.

time taken to resolve cases

year ended 31 March resolved within 3 months resolved within 6 months resolved within 9 months resolved within 12 months
2010 38% 67% 81% 89%
2009 30% 56% 77% 88%
2008 42% 70% 81% 86%
2007 34% 61% 76% 85%

Following public consultation, we had geared up to deal with a forecast 25,000 new complaints about payment protection insurance (PPI) during the year. However, the number of cases we actually received was double this forecast - with a record 49,196 cases referred to us. This meant that the average time to resolve this specific type of case was generally longer than for complaints about other products.

However, as our newly-recruited adjudicators progress through their initial training and mentoring, and reach their full potential, we will be able to improve timeliness across all areas of complaints. This is reflected in the timeliness targets we set ourselves in our budget for the financial year 2010/2011 - which will involve working towards eliminating waiting times for customers.

During the year we have also continued to investigate how we can better identify, filter and "fast track" the types of cases where we are more likely to be able to intervene early on and encourage informal settlement.

This work has included trialling innovative ways of communicating our views and decisions more clearly and concisely, using simple forms and postcards instead of our more usual detailed letters and lengthy reports.

The results of this trial project suggest that consumers and businesses receiving our new-style "short form" communications are more likely to agree with our conclusions at an early stage than those who receive the same conclusions set out in a more conventional letter.

As we outlined in our corporate plan and budget published in January 2010, this is an area where we will be developing and implementing ideas as part of our commitment to "process improvement" and more focused service delivery.

However, the time it takes to settle a complaint is also determined to a significant extent by the parties to the dispute themselves - and their response to any recommendations or informal settlement that our adjudicators may suggest. Where a dispute cannot be resolved this way, detailed investigations and lengthy reviews may be required, including an "appeal" to an ombudsman for a final decision.

During the year we have seen an increase in the number of disputes involving hard-fought arguments and entrenched attitudes on both sides - as businesses increasingly take a legalistic approach to dispute resolution and consumers become more demanding and less willing to concede. As already noted, this has resulted in a 24% increase in the number of cases appealed to an ombudsman as the final stage of our process.

We continue to prioritise cases where consumers might be disadvantaged by having to wait longer - for example, through financial hardship or for medical reasons. During the year we identified and prioritised 16,345 cases where financial hardship was a significant issue (around one in ten of all cases). Prioritising cases inevitably means that other complaints cannot be progressed as quickly as we would otherwise like.

quality and consistency

We are committed to improving the quality and consistency of our work. To help us do this, we have in place an established quality-assurance framework. This framework specifies and reinforces the quality standards which we have set ourselves. It also helps us monitor and evaluate our performance, identifying issues where we can improve what we do and how we do it.

Our quality assurance framework was independently assessed in the spring of 2010 and found to be "effectively designed involving a comprehensive system of checks".

Our core definition of "quality", around which our quality-assurance work is built, is "where a case is well-handled, the outcome reached is fair and reasonable, and communication is clear and prompt". Meeting this level of quality should ensure we can maintain a consistently fair, impartial and professional service.

Working with adjudicators and ombudsmen, our eight-strong quality-assurance team checks our casework against quality standards such as adherence to process, the thoroughness of investigation, the quality of communication and timeliness.

During the year we quality-checked more than 30% of cases against these standards. The information we gathered as part of this process has helped strengthen our case-handling procedures - and has given us a clear insight into what quality means in terms of the right approach and the right outcome in individual cases.

The quality committee - a sub-committee of our board of "public interest" directors - reviews the work of our quality-assurance team at its quarterly meetings. And again during the year, members of our executive team, as well as members of our board, have reviewed a cross-section of randomly-selected case-files, to see how the quality of case-handling makes a difference in individual complaints.

process improvement

Our small in-house process-improvement team plays a vital role in identifying and implementing changes to our processes that help improve the quality, consistency and efficiency of our work.

An example of this work is the project - described above - to see if we can communicate our views and decisions more succinctly using simple forms and postcards rather than lengthy letters and reports.

During the year this work has also included co-ordinating the "business-process improvement" review carried out by external consultants. This review examined the fundamentals of our business process, to see how far they remained "fit for purpose" - and how far they should be changed to reflect the increased scale of our operations, the use of latest technology, and expectations about our value-for-money and the standard of customer service.

Our process-improvement team also produces and verifies management information and performance data for operational and strategic purposes.

learning and developing

The skills and knowledge of our staff are key to ensuring high quality and consistency in our work. We dedicate significant resource to training and continuing professional development at all levels.

During the year our staff spent a total of 30,546 hours in training activities - an average of 4 days of training for each employee (3.5 days in the previous year). This training included tailored induction-courses for new starters, technical refresher training for experienced adjudicators and a range of management workshops.

knowledge and information

Our knowledge-management systems are at the heart of our work to ensure the quality and consistency of our approach to handling individual cases. We share up-to-date casework news and information across the organisation using our intranet-based knowledge-management "toolkit". This is supplemented with regular in-house clinics, briefings and seminars - which help us share knowledge, learn and improve.

We are also committed to sharing our knowledge with the outside world. Making information increasingly available about our approach to particular types of cases should make it easier for consumers and financial businesses to resolve more complaints themselves - without referring them to the ombudsman service.

During the year we added 1,000 new pages to our staff intranet and over 500 pages of new information to our website. This included expanding the online technical resource on our website and revising and updating the widely-used frequently-asked questions (FAQ) section. Our website was named website of the year 2009 in the Plain English Campaign's annual awards.

stakeholder research

Our commitment to continuous improvement is underpinned by our programme of stakeholder and customer research - which helps give us a closer understanding of what our customers want, how they rate the service we provide, and where we could do things better. This includes:

  • Carrying out customer-satisfaction research on an ongoing basis, to record and measure the opinions of consumers whose complaints we have handled.
  • Monitoring general consumer-awareness of the ombudsman service, on a quarterly basis, to help with our work on accessibility - ensuring that everyone who needs to contact us knows how to find us and how to access our service.
  • Running quarterly surveys to monitor the views of the businesses we cover.
  • Running an online survey on our website, giving customers the opportunity to give us feedback on the service they have received on their own case.

Results and feedback from these stakeholder-research activities are shown in more detail in who complained to us and who the complaints were about.

our service-review team

Recognising where we have made mistakes - and learning from any shortcomings - is also an integral part of our commitment to quality. This is why - just like the businesses whose complaints we handle - we have our own formal complaints procedure for people who are unhappy with the level of service we have provided.

These complaints are handled by a specialist team of complaints handlers - our service-review team. In the financial year 2009/2010, this team handled 1,765 complaints about our service - 1% of our total caseload (compared to 1,307 complaints - also 1% of our caseload - in the previous year).

8% of these complaints were made by businesses and the others were all from consumers or their representatives.

The service-review team upheld 27% of the complaints they reviewed during the year - compared with 25% in the previous year. They paid compensation in 113 cases in recognition of the inconvenience caused by delays or administrative errors on our part. The average payment was between £150 and £200.

Where our service-review team is unable to resolve a complaint about our service, it can be referred to the independent assessor - for a formal review of the level of service we have provided.

The independent assessor's annual report is published in full as part of this annual review. As the chairman has noted in his foreword, all the independent assessor's recommendations in individual cases have been accepted - as have his helpful suggestions more generally on the way we provide our service.

our budget and productivity

We are funded by an annual levy paid by the businesses we cover - and by case fees that we charge businesses for settling disputes referred to us about them.

In the financial year 2009/2010 we did not charge businesses case fees for the first three disputes involving them. Businesses were charged case fees only for the fourth (and any subsequent) dispute during the year. There is more information further on in this document about how many businesses paid case fees.

Our budget is calculated on the basis of workload forecasts that we consult on publicly each year in January and February - before the start of the new financial year.

Following public consultation in January and February 2009, the boards of the FSA and the Financial Ombudsman Service approved a budget for the ombudsman service - for the financial year 2009/2010 - that assumed income of £92.9 million, expenditure of £92.6 million, and a unit cost of £559.

The actual final figures for the year showed total income of £98.4 million, expenditure of £92.4 million, and a unit cost of £555.

The unit cost was lower than budgeted - but higher than in previous years. This reflects the costs of recruiting and training 300 new adjudicators during the year, to help deal with the substantially increased caseload and improve the timeliness of our complaints handling. Many of these newly-recruited staff became fully productive only towards the end of the year.

This is also reflected in a lower level of productivity - measured by the average number of cases resolved weekly by each adjudicator. However, we forecast that our productivity will increase again in 2010/2011, as a substantial number of our recently-recruited adjudicators reach their full potential.

average number of cases resolved weekly by each adjudicator

year ended
31 March
average number resolved
2010 4.1
2009 4.8
2008 4.0
2007 4.1
2006 4.5
2005 4.4

our unit cost

year ended
31 March
our unit cost (£)
2010 555
2009 508
2008 529
2007 484
2006 433
2005 496

Our unit cost is calculated by dividing our total costs (before financing charges and any bad debt charge) by the number of cases we complete.

Our productivity - and our ability to respond swiftly and flexibly to volatility in the number and type of complaints we receive - will also be enhanced by the teams of contract and outsourced staff that we now have in place, helping to meet both long-term and short-term demand.

Additionally, we expect that increases in productivity should result from the range of process improvements and efficiencies that we aim to introduce during the year.

However, the impact of these operational efficiencies could be reduced by the increased complexity of the cases we are now seeing - and by the rising number of disputes involving hard-fought arguments and entrenched attitudes on both sides.

our income and expenditure

our income and expenditure (summary) actual
year ended 31 March 2010
year ended 31 March 2010
year ended 31 March 2009
year ended 31 March 2008
annual levy 20.6 19.5 19.3 19.6
case fees 77.6 72.9 46.1 35.5
other income 0.2 0.5 0.4 0.4
total income 98.4 92.9 65.8 55.5
staff-related costs 78.3 78.1 47.8 41.2
other costs 12.3 12.2 8.7 10.0
financing charges 0.0 0.2 0.1 0.2
depreciation 1.8 2.1 1.4 1.7
total expenditure 92.4 92.6 58.0 53.1
exceptional costs 0.0 0.0 0.0 2.9
surplus/(deficit) 6.0 0.3 7.8 (0.5)

These figures are drawn from our unaudited management accounts. The directors' reports and audited financial statements are available separately on our website and as hard-copy.

The amount of bad debts written-off during the year was £0.5 million - resulting from firms we cover going out of business, leaving case fees unpaid with no realistic chance of recovery. Over 90% of these costs related to firms that have either been liquidated or placed "in default" by the Financial Services Compensation Scheme (FSCS).