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annual review 2010/2011

1 April 2010 to 31 March 2011

how we dealt with the complaints

number of cases we resolved

We continued to settle cases at record levels - resolving a total of 164,899 cases in the financial year 2010/2011. This is 0.85% fewer than the 166,321 cases we resolved in the previous year - and is the second highest number in any year since the ombudsman service was set up in the year 2000.

year ended
31 March
cases resolved
2011 164,899
2010 166,321
2009 113,949
2008 99,699
2007 111,673
2006 119,432
2005 90,908
2004 76,704
2003 56,459
2002 39,194

However, the number of cases we were able to settle during the year was lower than we had initially anticipated. This was because of slower progress on large numbers of payment protection insurance (PPI) complaints - which were hampered by delays, uncertainty and less co-operation from some financial businesses, as a result of the legal challenge on PPI-related matters brought during the year by the British Bankers Association (BBA) on behalf of a number of high-street banks.

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 71 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. 10,730 cases had a final decision by an ombudsman in the financial year 2009/2010 - rising 63% to 17,465 cases in 2010/2011 (following a 24% rise in the previous year).

This means that 11% of cases we settled during the year required an ombudsman to make a final decision - as the last stage of our process - compared with a figure of around 8% in earlier years.

This increase in the number of cases where a complaint is pursued to an ombudsman decision appears to continue a trend 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.

Of the final decisions made by ombudsmen during the year, 38% of requests were made by financial businesses and 62% by consumers. In over eight out of ten final decisions, ombudsmen reached the same basic conclusions as the adjudicators who handled the cases in the earlier stages. Where they did not do so, there was usually a finely-balanced judgement call or, more often, new facts came to light only at that very late stage.   

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.

which type of complaints required ombudsman decisions? %
pensions 30
other investments 25
general insurance 16
mortgages 15
banking 13
consumer credit 7
payment protection insurance (PPI) 1.5
ombudsman decisions - by product %
banking 39
other investments 24
general insurance 18
mortgages 6
pensions 5.5
payment protection insurance (PPI) 4.5
consumer credit 3

Younger people are statistically less likely to request a formal ombudsman's decision than consumers of other ages. In fact, the proportion of cases requiring an ombudsman's final decision increases by age group. However, this largely reflects the types of financial products involved - with older people more likely to have more complex products such as pensions and investments.

"... younger people are less likely to request an ombudsman's decision than consumers of other ages"

However, the proportion of men and women who requested a final decision by an ombudsman was broadly similar - as was the proportion of requests made by consumers from different faith and ethnic groups. There is more information about the diversity of our customers - and their experience of our service - further on in this annual review.


As part of our work resolving complaints, our rules allow us to hold hearings - face-to-face meetings - either in public or private. We can also hold hearings over the phone, where this is more convenient for everyone involved. Hearings are generally as informal as possible.

During the year we again held fewer than 20 hearings in cases where the ombudsman considered that it would help them get to the bottom of a case. We hold hearings only where the ombudsman believes a case cannot be fairly decided on the basis of the documentary evidence and the material that the two sides have already provided.

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 - and neither side is given a private meeting with the ombudsman deciding the 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")

In total we upheld 51% of the complaints we settled in the financial year 2010/2011 - compared with 50% of cases in the previous year.

insurance complaints

insurance complaints 2009 2010 2011
payment protection insurance (PPI) 89% 89% 66%
motor insurance 50% 38% 45%
buildings insurance 44% 43% 42%
contents insurance 41% 38% 41%
travel insurance 39% 44% 42%
health insurance 31% 35% 43%

banking and credit complaints

banking and credit complaints 2009 2010 2011
current accounts 61% 20% 28%
credit cards 76% 68% 61%
mortgages 40% 37% 37%
unsecured loans 49% 48% 43%
consumer credit 45% 58% 47%
savings accounts 64% 51% 42%
other banking services 55% 46% 43%

investment complaints

investment complaints 2009 2010 2011
mortgage endowments 37% 38% 31%
whole-of-life policies and savings endowments 34% 26% 32%
investment bonds 42% 45% 60%
pensions 23% 28% 38%
stockbroking and portfolio management 42% 49% 66%

year ended 31 March

complaints data about named businesses

Since September 2009 we have published complaints data on our website every six months about named individual businesses. The data shows the number of new complaints - and the proportion of complaints we upheld in favour of consumers - for businesses that have 30 or more new cases (and 30 or more resolved cases) in each six-month period. The complaints data shows that:

  • 150 or so businesses (out of more than 100,000 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 12,750.
  • The proportion of cases we uphold in favour of the consumer varies substantially from business to business - between 10% and 100%.

putting things right

Where we uphold a complaint in favour of a consumer, there are a number of 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 20,019 cases during the year - 28% of the cases we upheld (24% in the previous year) - generally awarding between £150 and £500.

  • Directing the business to do something (or not do something), 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.

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

"... our aim is to give a clear explanation - from an entirely impartial standpoint"

In many cases it is poor communication between a financial business and its customer that leads to a simple misunderstanding escalating to the stage where the ombudsman service has to get involved.

Consumers can sometimes pursue complaints in an unfocused way that may make them appear unreasonable to the business they complain to. On the other hand, businesses sometimes respond to customer concerns unhelpfully and defensively - aggravating problems that a clear, helpful and sympathetic explanation might have resolved.

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".

Of the 164,899 complaints we settled during the financial year 2010/2011, we concluded that 1,447 cases (0.9% of the total) could be categorised in this way (0.4% in the previous year). 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 takes to settle complaints that are referred to the ombudsman service.

We resolved 41% of all complaints within three months and 70% within six months - both improvements on the previous year. However, reducing the time it takes us to settle cases remains a key priority for us in terms of improving our customer service - and we aim to further improve timeliness next 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
excluding PPI complaints
47% 75% 84% 88%
all cases
41% 70% 81% 87%
38% 67% 81% 89%
2009 30% 56% 77% 88%

We are disappointed that our work to reduce the time it takes us to resolve complaints has been less successful in relation to cases involving payment protection insurance (PPI). Progress has been much slower than we would have liked on most PPI cases for two reasons:

  • The number of PPI cases we received during the year exceeded by 127% the number we had geared up to deal with, following public consultation at the start of the year. We had expected to receive 46,000 PPI cases - not the record 104,597 cases we actually received.
  • In addition to significant further volumes of new cases following publicity about the British Bankers Association's judicial review of PPI-related matters, this legal challenge resulted in some businesses deciding not to respond substantively to many PPI complaints.

The large volumes of PPI complaints - together with delayed and uncertain progress on many of these cases, as businesses become less co-operative in handling them - means that the average time to resolve PPI complaints is now significantly longer than for complaints about other products.

As the table above shows, the timeliness figures for 2010/2011 improve significantly if we exclude PPI cases - with 47% of all cases other than PPI resolved within three months and 75% of cases resolved with six months.

"... we are seeing businesses become less willing to concede and consumers become more demanding"

However, it is not only in PPI cases where we have seen more businesses taking a legalistic approach to dispute resolution - often resulting in delayed progress and slower case handling. In most areas of our work, we are now seeing disputes involving hard-fought arguments and entrenched attitudes - on both sides - as businesses become less willing to concede and consumers become more demanding.

This resulted in a 63% increase during the year in the number of cases where an ombudsman issued a final decision as the last stage of our process.

"... we identified and prioritised 12,226 cases where financial hardship was a significant issue"

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 12,226 cases where financial hardship was a significant issue. Eight out of ten hardship cases involved complaints relating to current accounts, and the other cases mostly related to credit cards, overdrafts and loans.

Of course, prioritising cases such as these inevitably means that other complaints cannot be progressed as quickly as we would otherwise like.


Delivering a high-quality service is of fundamental importance to us. It is what matters most to all our customers and stakeholders. "Quality" for us means that in every case we should be able to show that we have:

  • Made the decision in the right way - getting to the heart of the issue and consistent with other decisions in similar cases.
  • Treated the customer well - the consumer and the business in each case - so that they are satisfied with our level of service.
  • Got the basics right - for example, responding appropriately to different communication needs.

Further steps we have taken during the year, to ensure that quality is at the heart of what we do, include:

  • Designing an enhanced career model that encourages and enables the professional development of our case-handling staff.
  • Further developing the role of our ombudsmen as mentors and coaches.
  • Extending our approach to knowledge management, to ensure that all our staff have the information they need.
  • Promoting a practical understanding of why and how our customers may have different needs - and being able to respond appropriately.
  • Motivating managers in all areas across the organisation to champion the key importance of quality as a core value within their own teams.
  • Making sure that all our staff understand why quality matters - in everything they do.

During the year members of our executive team, as well as members of our board, again reviewed a cross-section of randomly-selected closed cases, to see how the quality of case-handling makes a difference in individual complaints.

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 30,087 hours in training activities (30,546 in the previous year) - an average of 3.7 days of training for each employee. This included:

  • Briefings, updates and technical refresher-training for adjudicators.
  • A wide range of workshops and training for our managers.
  • Casework "clinics" led by ombudsmen and technical experts.

We also trialled an "academy style" approach to training newly-recruited adjudicators. This involves an intensive classroom induction for their first 12 weeks, before placing each new adjudicator in a team of experienced adjudicators for structured on-the-job training and mentoring.

"... we ran our customer-service programme in partnership with eight disability, mental health and wellbeing charities"

During the year we continued to provide our staff with the skills to deal confidently and sensitively with an increasingly diverse range of customers, including those with different needs. This included:

  • Our latest disability-awareness and customer-service programme - launched by wheelchair basketball player, Ade Adepitan, a gold-medallist at the 2005 Paralympic World Cup - and run in partnership with eight disability, mental health and wellbeing charities, including the Samaritans, British Dyslexia Association and Alzheimer's Society.
  • Our "customer experience" workshops - aimed at helping us better understand what it might feel like to interact with our service from the perspective of a range of people from diverse backgrounds. We initially ran these workshops for our board and executive team - and have now extended the programme to include our managers, ombudsmen and new adjudicators joining us.

knowledge and information

One of our key priorities is to put knowledge and expertise at the heart of everything we do. We rely on the skills, expertise and professionalism of our staff to resolve the complaints referred to us - and arrive at the right outcome in each case.

We share up-to-date casework news and information across the organisation, using our knowledge-management "toolkit" on our staff intranet. This helps us ensure the quality and consistency of our approach to individual cases.

This approach is supplemented with regular in-house clinics, mentoring sessions, briefings and seminars - which help us share knowledge, learn and improve. During the year we also launched an online forum and wiki on our intranet - for staff to share comments, questions and views about casework issues.

"... knowledge and expertise are at the heart of everything we do"

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 or updated 2,073 pages of our website and 13,124 pages of our staff intranet. This included doubling the content of the online technical resource on our website and revising and updating the widely-used frequently-asked questions (FAQ) section.

stakeholder research

We carry out a programme of stakeholder and customer research - to help 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 programme includes:

During the year we also carried out a customer "segmentation" project - involving research and focus groups with businesses and consumers. This project gave us a significant insight into the needs and behaviours of our customers - in terms of their attitudes to complaints generally, as well as to using the ombudsman service specifically.

We are now using the insights we gained from this work to help us, as we develop and improve our processes and technology to better reflect the needs of our customers. We have also used these insights to develop the "customer experience" workshops mentioned above - as part of our commitment to developing individual responsibility for providing tailored service that better meets individual needs.

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

handling complaints about us

Recognising where we have made mistakes - and learning from any shortcomings - is a vital part of our commitment to providing a service for our customers that we can be proud of. 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.

We can usually sort out many problems straight away - as soon as someone tells us that they are unhappy with the standard of service they have received. Prompt intervention by the relevant manager - and an immediate phone call to apologise or explain - means we can resolve many issues at this level without the problems escalating into formal complaints.

But if we are not able to sort out matters at this stage to the satisfaction of the customer, one of our senior managers will look into the problem. This applies to complaints both from consumers and businesses.

The process is entirely separate from the usual process that applies if a consumer or business disagrees with our views on the merits of their case - and wants us to re-consider facts and arguments.

In the financial year 2010/2011, we handled 2,489 complaints about our service - including complaints subsequently referred to the independent assessor. These related to 1.2% of our total caseload. 5% of these complaints were made by businesses and the others were all from consumers or their representatives.

We upheld 33% of these complaints. This involved paying compensation in 271 cases, in recognition of the inconvenience caused by delays or administrative errors on our part. The average payment - including compensation recommended by the independent assessor - was £258.

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

Each year the independent assessor produces an annual report for our board, setting out findings and recommendations made over the year. We publish the independent assessor's report in full on our website.

our budget and funding

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 2010/2011 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 annual review 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 2010, the boards of the FSA and the Financial Ombudsman Service approved a budget for the ombudsman service - for the financial year 2010/2011 - that assumed income of £113.7 million, expenditure of £115.7 million, and a unit cost of £550. The actual final figures for the year showed total income of £98.3 million, expenditure of £105.9 million, and a unit cost of £639.

our unit cost

year ended
31 March
our unit cost (£)
2011 639
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.

The unit cost was higher than budgeted - reflecting the rising number of disputes involving hard-fought arguments and entrenched attitudes. We suggested in last year's annual review that this could turn out to be the case - when we warned that the increased complexity of the disputes we were starting to see, and the marked increase in cases requiring a final ombudsman's decision, might reduce the impact of a range of operational efficiencies we were introducing.

The unit cost - and our ability to settle cases promptly and efficiently - has also been significantly affected by a wide range of operational challenges arising out of the British Bankers Association's judicial review of PPI related matters.

our income and expenditure

our income and expenditure (summary) actual
year ended
31 March
£ m
year ended
31 March
£ m
year ended
31 March
year ended
31 March
annual levy 20.9 19.5 20.6 19.3
case fees 77.1 94 77.6 46.1
other income 0.3 0.2 0.2 0.4
total income 98.3 113.7 98.4 65.8
staff-related costs 88.8 99.7 78.3 47.8
other costs 15.0 13.9 12.3 8.7
financing charges 0.0 0.2 0.0 0.1
depreciation 2.1 1.9 1.8 1.4
total expenditure 105.9 115.7 92.4 58.0
surplus/(deficit) (7.6) (2.0) 6.0 7.8

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.