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annual review 2012/2013

1 April 2012 to 31 March 2013

other work we have done

To support our work in settling disputes between consumers and financial businesses, we feed back the lessons learned from our work to a wide range of stakeholders and customers. This section of the annual review highlights some of these stakeholder engagement activities.

working with the regulators

We have regular contact with the Financial Conduct Authority (previously the Financial Services Authority) as the regulator of financial services, and with the Office of Fair Trading as the regulator of consumer credit - on matters that are relevant to our role and responsibilities.

During the year we worked particularly closely with the regulators through the joint
"co-ordination committee". This has helped to identify emerging issues that affect large numbers of consumers or businesses - and where regulatory action may be needed.

We also worked with the Financial Services Authority (FSA) on:

  • The transfer of consumer credit regulation to the new Financial Conduct Authority (FCA) - due to take place in April 2014.
  • The updating of our rules, following the changes brought in by the Financial Services Act 2012.
  • The possibility of establishing a special scheme allowing the ombudsman service to deal with complaints about interest-rate hedging products brought by businesses that would otherwise be outside our jurisdiction. Following consultation with stakeholders, the FSA announced in January 2013 that it had decided it was not appropriate to ask us to set up this scheme.

extensions to our remit

We worked closely during the year with HM Treasury, the FSA and others on a number of changes to our remit. This included:

  • Bringing credit unions in Northern Ireland under our remit from 31 March 2012 - at the same time that the FSA took on regulatory responsibility for them.
  • Preparatory work in readiness for the transposition of the Alternative Investment Fund Managers Directive into UK law.

regulatory reform

During the year we continued to work closely with HM Treasury and the FSA on how we would implement proposals set out in the Financial Services Bill - which was introduced into Parliament in January 2012.

Following scrutiny by MPs and peers, the Financial Services Bill received Royal Assent in December 2012. The Act amends the Financial Services and Markets Act 2000. Under the Act, the FSA was replaced by the Financial Conduct Authority (FCA) from 1 April 2013.

The key changes for the ombudsman service under the new Act are:

  • The requirement for the ombudsman to publish final decisions.
  • A new duty to disclose information to the FCA. We also have the ability to "make a reference" to the FCA about the conduct of regulated businesses in certain circumstances - to which the FCA must respond within 90 days.
  • A duty to cooperate with the FCA - and to explain how we will do so in a Memorandum of Understanding.
  • A requirement to consult on, prepare and publish an annual plan.
  • Becoming subject to audit by the National Audit Office (NAO).

national and international role

We continue to maintain close relations with a number of government departments that have a particular interest in what we do - including HM Treasury, the Department for Business, Innovation and Skills, and the Ministry of Justice.

We have also worked closely with the Claims Management Regulator, which is part of the Ministry of Justice. We have reported information to them about trends and concerns relating to cases referred to us by claims-management companies - in particular, cases involving mis-sold payment protection insurance.

We have worked with a number of other government departments with an interest in our work - including, for example, the Department for Energy and Climate Change about the redress arrangements for the "green deal".

At an international level, we have continued to work with the European Commission on improving the availability of cross-border "alternative dispute resolution", primarily through FIN-NET, the network of European financial dispute-resolution services.

We have also worked with the Commission and the other EU institutions on the recently-agreed directive on "alternative dispute resolution" and regulation on "online dispute resolution".

freedom of information

Our many stakeholders - ranging from consumers deciding whether to pursue complaints, to trade associations carrying out policy research - look to the ombudsman service to provide the information they need. We aim to be as open and helpful as we can in making information freely available.

The government extended the Freedom of Information Act to cover the ombudsman service from November 2011. During the year we received around 250 formal requests for information under the Act. These requests covered issues ranging from our governance arrangements to the complaints we handle about particular types of financial product.

Many of the facts and figures we are regularly asked for are already publicly available through the "publication scheme" on our website.

publishing decisions

Under the new Financial Services Act, which received Royal Assent in December 2012, we are required to publish the final decisions of our ombudsmen.

We welcome this - and we have been preparing for it over the last few years. These preparations have included consultation with stakeholders on the practical issues involved.

We started the process for publishing decisions in April 2013 - with a view to making a comprehensive resource of decisions publicly available from the summer of 2013. This resource - in the form of a searchable online database - is expected to grow at a rate of over 2,000 decisions every month.

Our stakeholders have been largely supportive of publishing ombudsman decisions. During our consultation it has been acknowledged that increased openness about the cases we see could help financial businesses and consumers alike - preventing future problems and complaints - while also improving our own accountability.

Publishing the individual decisions of our ombudsmen also builds on our commitment to share information and feedback about our approach. For example, our online technical resource already sets out in detail the approach we take to the disputes we see involving the financial products and services that account for over 90% of our workload.

We also already publish in full significant ombudsman decisions where we believe there is public interest in doing so - for example, in high profile cases that have involved pet cover, travel insurance and volcanic ash, and interest-rate hedging products.

Over the last decade or so our regular newsletter, ombudsman news, has featured over a thousand case summaries drawn from the full breadth of our complaints work - from catalogue credit to film partnerships.

review of our case-fee structure

In 2012 we consulted on changes to our case-fee structure - to apply from April 2013. The case-fee structure had served the ombudsman service and case-fee payers well for a decade - as it was simple to understand and reasonably straightforward to operate.

However, it was becoming increasingly difficult to handle the cost pressures and financial risks brought about by the volatile demand for our service. It did not recognise the much wider and more diverse group of financial businesses that we now cover - ranging from some of the largest businesses in the UK to many of the smallest.

We consulted in 2012 on two key changes to our case-fee arrangements:

  • Charging the very largest financial groups on a "group-account" basis - focusing less on charges for individual cases and more on a broader assessment of the total proportion of our costs attributable to each major group.
  • Ensuring that smaller businesses generally pay no case fees at all - by increasing the number of "free" cases from 3 to 25, which would have a more proportionate impact on these businesses.

These changes were well supported by our stakeholders - and we implemented them in our case-fee arrangements from April 2013.

engaging with stakeholders

We carry out a wide range of activities aimed at sharing our experience and knowledge with the outside world. Over the year these external liaison and outreach activities have included:

  • Answering 23,381 enquiries to our advice desk - our dedicated service for professionals handling complaints in the financial services industry and the consumer-advice sector.
  • Responding to 574 parliamentary enquiries (and 20 ministerial questions) - and organising and taking part in a range of events for MPs and their constituency caseworkers, including "drop-in surgeries" and seminars.
  • Organising visits, meetings and training for businesses we cover - including a relationship-management programme for the financial services groups that together account for most complaints referred to the ombudsman service during the year.
  • Running our industry steering group and our industry panel; hosting our smaller-businesses forum; and holding workshops and seminars around the UK for financial businesses and claims-management companies on a range of topical complaints-related issues.
  • Holding over 20 regional training days for community and advice workers across the UK - to share our complaints-handling skills with frontline problem-solvers in the community; and hosting our quarterly consumer liaison forum for representatives from consumer groups.
  • Taking our exhibition stand to key consumer events, including the 50+ Show in Glasgow, Belfast's Balmoral agricultural show and the Birmingham mela.
  • Speaking at seminars and conferences hosted by organisations ranging from Macmillan Cancer Support in Glasgow to the Manchester Claims Association.
  • Targeting specific audiences - those less likely to use, or be aware of, the ombudsman service - including advertising on buses in Northern Ireland and "click throughs" direct to our website from
  • Adding or updating over 2,000 pages of our website - including 149 news updates and increased video content.
  • Publishing eight issues of our newsletter, ombudsman news - covering our approach to complaints about a wide range of issues including catalogue shopping, pet insurance and mortgage arrears.
  • Answering media questions and providing information for publications ranging from Wealth Manager to Woman & Home - and taking part in over 200 broadcasts, from BBC News at Ten to Eava FM, the Leicester-based multilingual community radio station.

During the year we met frontline community workers and consumer advisers at over 20 events we hosted across the UK in:

  • Belfast
  • Birmingham
  • Brighton
  • Cardiff
  • Chelmsford
  • Coventry
  • Darlington
  • Derby
  • Doncaster
  • Ealing
  • Exeter
  • Glasgow
  • Kilmarnock
  • Leicester
  • Middlesbrough
  • Perth
  • Preston
  • Reading
  • Southampton
  • Southwark
  • Stratford, East London

94% of the consumer representatives who took part in one of these events said that it had given them a better understanding of financial problems and the role of the ombudsman - which would change the way they approached complaints in future.