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annual review 2011/2012

1 April 2011 to 31 March 2012

who the complaints were about

businesses complained about - by sector

financial services sector %
banks 65.5
general-insurance intermediaries 9.5
general insurers 8
life insurance and investment product-providers 5
mortgage intermediaries 3.5
building societies 3.5
businesses with a consumer-credit licence 2
independent financial advisers (IFAs) 1
other (including fund managers and stockbrokers) 2

The overall proportion of disputes relating to banks remained the same as the previous year - at 65.5% of all cases. This continued to reflect the volume of complaints about payment protection insurance (PPI) during the year. The proportions of cases involving general-insurance intermediaries and mortgage intermediaries also remained identical to the previous year.

The proportion of cases involving building societies rose from 2% to 3.5%. But cases relating to independent financial advisers (IFAs) continued to decrease - from 1.5% to 1% - reflecting the steady decline in the number of complaints to the ombudsman service about investments and pensions.

financial products most frequently complained about - by sector

These tables show how new complaints involving the products most frequently complained about to the ombudsman service were spread across the different sectors of the financial services industry.

complaints about payment-protection insurance (PPI) %
banks 75
insurance intermediaries 15
general insurers 4
building societies 2
other 4
complaints about general insurance (excluding PPI) %
general insurers 63
insurance intermediaries 17
life insurance & investment product-providers 9
banks 7
Society of Lloyd's 1
other (including cash-plan health insurers) 3
complaints about banking and credit %
banks 78
mortgage intermediaries 8
businesses with a consumer-credit licence 7
building societies 2
other 5
complaints about mortgages %
banks 65
mortgage intermediaries 17
building societies 7
IFAs 3
other (including non-bank mortgage providers) 8
complaints about investment products %
life insurance and investment product-providers 47
banks 26
independent financial advisers (IFAs) 11
stockbrokers and fund managers 4
building societies 2
other (including friendly societies and credit unions) 10
complaints about pensions %
life insurance and investment product-providers 56
independent financial advisers (IFAs) 21
banks 8
other (including building societies and stockbrokers) 15

outcome of cases - by sector

In this annual review we show the outcome of complaints in relation to the financial products we receive most complaints about. For these products, the proportion of cases we upheld in favour of consumers ranged from 28% to 82%.

We also refer to the six-monthly sets of data published on our website - relating to the 160 or so individual businesses that together generate around 90% of our complaints workload. This data shows the number of new complaints - and the proportion of complaints we upheld in favour of consumers - for each of these businesses. This uphold rate varied substantially from business to business during the year - from 2% to 98%.

The table below shows the outcome of cases in the financial year 2011/2012 - by sector.

% of complaints where the outcome changed as a result of our involvement ("we upheld the complaint") %
intermediaries selling PPI 72
banks 70
general insurers 54
independent financial advisers (IFAs) 54
businesses with a consumer-credit licence 52
intermediaries selling general insurance 49
intermediaries selling banking and/or mortgage products 39
life insurance and investment product-providers 37
building societies 21

how often do businesses have complaints about them referred to the ombudsman?

  • 2,369 businesses each had 1 complaint referred to the ombudsman service during the year
  • 624 businesses each had 2 complaints to the ombudsman
  • 285 businesses each had 3 complaints to the ombudsman
  • 574 businesses each had between 4 and 10 complaints to the ombudsman
  • 196 businesses each had between 11 and 20 complaints to the ombudsman
  • 185 businesses each had between 21 and 50 complaints to the ombudsman
  • 79 businesses each had between 51 and 100 complaints to the ombudsman
  • 81 businesses each had between 101 and 250 complaints to the ombudsman
  • 31 businesses each had between 251 and 500 complaints to the ombudsman
  • 51 businesses each had more than 500 complaints referred to the ombudsman during the year

Customers of over 100,000 businesses that provide financial services have the statutory protection of the Financial Ombudsman Service, should a dispute arise. This includes:

  • 80,000 businesses with a standard consumer-credit licence issued by the Office of Fair Trading (OFT).
  • Banking, mortgage, investment and insurance firms regulated by the Financial Services Authority (FSA).
  • National Savings & Investments (NSI).

These businesses range in size from global financial services groups to sole traders providing credit as a sideline to their main business. This range in size is reflected in the number of complaints we receive about the different businesses we cover - which followed a very similar pattern during the year to previous years.

  • 10 financial services groups accounted for 75% of new cases
  • the next 20% of cases were from 328 businesses
    (with between 26 and 3,000 cases each)
  • the remaining 5% of cases were from 4,048 businesses (with 25 or fewer cases)

In the financial year 2011/2012, fewer than 5% of the total number of businesses covered by the ombudsman service had complaints referred to us.

Four of the UK's largest financial services groups accounted for 138,848 cases (52.5% of all the complaints we received). At the other end of the scale, 182 cases (0.1% of all complaints) related to friendly societies (124 in the previous year) and 79 complaints involved credit unions (30 in the previous year).

During the year we published complaints data showing the number of new cases, and uphold rates, for each of the 160 or so financial businesses that together generate some 90% of our workload.

3,278 businesses - out of the 4,475 in total that had complaints referred to the ombudsman service during the year - had fewer than four complaints. This meant that 73% of businesses with complaints referred to the ombudsman service paid no case fees (74% in the previous year) - as again we did not charge for the first three complaints during the year.

In January 2012 we launched a public consultation on proposals for new case fee arrangements which would come into effect from April 2013. These proposals would involve:

  • Increasing the number of free cases from 3 to 25 for the majority of businesses that have the lowest number of complaints referred to the ombudsman service (so that only 1% of businesses would pay any case fees at all).
  • Developing a new group-account arrangement for each of the 10 financial services groups that together account for 75% of our complaints workload.

how do businesses rate the service we provide?

We carry out regular surveys on how the businesses we deal with rate the level of service we provide. These surveys cover all sectors of the financial services industry, ranging from sole-proprietor businesses to the largest financial groups.

  % who agree % who express no view % who disagree
the financial services industry can have confidence in the ombudsman service 49 28 23
our service is good value for businesses who pay the levy/case fees that fund us 40 34 26
our decisions on cases are fair and unbiased 52 21 27
our decisions are consistent 42 28 30
we provide a good dispute-resolution service for businesses 57 28 15

On average, the overall proportion of businesses agreeing with these statements about our service rose slightly during the year - from 46% to 48%. The proportion agreeing with three of the five statements increased - most significantly, those agreeing that our decisions are consistent (rising from 36% to 42%).

More businesses also said that we are good value - with 40% agreeing this, compared with 35% in the previous year. This may reflect the findings of the National Audit Office (NAO) who reported on our efficiency in January 2012. It may also reflect our new proposals for changing our case-fee structure for businesses. These proposals - which would mean that only 1% of businesses paid case fees in future - were given a broadly positive welcome when we published our consultation paper in January 2012.

On the other hand, the proportion of businesses agreeing that our decisions are fair and unbiased slipped back during the year - from 55% to 52%. This may reflect the significant increase in the proportion of cases we upheld during the year in favour of consumers rather than businesses (rising to 64% from 51% in the previous year).

However, half of businesses still agreed our decisions are fair and unbiased. This suggests that the way businesses rate the fairness of our service may not be entirely determined by the outcome of complaints.

Around three out of ten businesses were still unable or unwilling to express views on issues widely considered to be of key interest to the financial services industry - most significantly, on whether our service provides value for money.

engagement with financial businesses and trade associations

In this annual review we highlight some of the external-liaison work we have carried out during the year with the financial services industry - including training and guidance on complaints-handling and the work of our technical advice desk in supporting businesses on complaints prevention.

During the year we recorded feedback from businesses on what they think about the ways in which we share information with them about our work settling disputes - and which one of our external-liaison support services they most value.

which of our support services do businesses value? %
our website (including our online technical resource) 29
our technical advice desk 28
ombudsman news 20
other publications (including our quick guides for businesses) 14
events and seminars 9
what the questions to our technical advice desk related to %
our approach to insurance complaints 33
our approach to banking & credit complaints 32
our casework procedures 16
our approach to payment protection insurance (PPI) 13
our approach to investment complaints 6

Our technical advice desk handled 19,281 enquiries from professional complaints handlers during the year - a 15% increase on the previous year. 83% of these calls were from businesses and 11% from community workers and consumer advisers. The other enquiries were from a range of users and stakeholders including researchers and trade associations.

During the year, 71% of people who used the technical advice desk said they were "very satisfied" with the service - with an overall satisfaction rate of 98%. In response to feedback from the survey, we extended the opening hours of the technical advice desk by two hours each day.

For smaller businesses, we also have an outreach team who work closely with trade associations and networks both nationally and regionally. Our outreach team run our introduction to the ombudsman seminars, where smaller businesses - who are otherwise less likely to have direct contact with us - can meet us and ask the ombudsman questions face-to-face.

During the year we met smaller businesses at events we hosted across the UK.

  • Belfast
  • Cambridge
  • Birmingham
  • Bristol
  • Cardiff
  • Glasgow
  • Leeds
  • Manchester
  • Newcastle upon Tyne
  • Southampton

90% of the smaller businesses who took part in one of these events said that it had given them a better understanding of complaints handling and the role of the ombudsman - which would change the way they approached customer complaints in future.

For the 16 financial services groups that together accounted for the majority of complaints referred to the ombudsman service during the year, we run a tailored relationship-management programme. This includes establishing constructive relationships between ourselves and the businesses concerned, at both operational and strategic level, to ensure that the significant caseloads involved are managed as effectively and efficiently as possible.

… this involves constructive relationships at both operational and strategic level

As well as the regular contact we have with businesses and their trade associations at this operational level, we have also always had more formal arrangements in place for strategic dialogue with the financial services industry.

Following consultation with industry stakeholders during 2010, we replaced the three sectoral liaison-groups (for banking, insurance and investment) - that had provided a channel for more formal communication between the ombudsman service and the industry since 2000 - with a small cross-sector industry steering group and a wider cross-sector industry panel.

The high-level steering group is chaired by our chairman and includes 16 chief executives of key financial services institutions. At meetings of this group - and in other high-level industry meetings - we have discussed strategic issues such as major trends in complaints and our funding mechanism. Minutes of the various meetings of the steering group are available on our website.

Membership of the wider cross-sector industry panel includes 200 financial services practitioners and officials from 30 trade associations. We keep in regular contact with the industry panel through a fortnightly email newsletter and a series of events, including meet the ombudsman Q&A sessions and specialist seminars on complaints-related topics (for example, on PPI and on the quality of goods bought with credit).