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annual review 2014/2015

1 April 2014 to 31 March 2015

chief ombudsman's report

Although 2014/2015 has been our fifteenth year of settling consumer complaints, this is our sixteenth annual review. We published our first in March 2000 - before a single complaint had been referred to us. Called laying the foundations, it described the previous few months’ preparations for the year ahead - which would be the first year of operation for a new, unified financial ombudsman scheme.

I think looking back to our foundations is a fitting way to introduce this annual review of our work in 2014/2015. Perhaps more so than ever, it’s been a year of developments for our service - developments that wouldn’t have been possible without previous years’ investment.

… keeping fairness at our heart - being fair and feeling fair

We were established to settle complaints fairly. So it shouldn’t come as a surprise that, today as fifteen years ago, our commitment to fairness underpins every decision we make - from the answers we give in individual complaints, to the choices we make about our people and resources.

While the mix of financial products and services may change over time, year on year we see the same fundamental issues at the heart of complaints. It’s clear that, for many people, the wider impact of what’s happened - and how it’s made them feel - isn’t something that money alone can put right. So disputes are unlikely to be resolved simply by asking “how much?” Instead, it’s about asking “what’s fair?”

We recognise that, in practice, fairness means different things to different people - in different situations and at different times. To ensure our answers remain fair and relevant today - not fifteen years ago - it’s essential that we understand what matters to a diverse range of communities.

So this year we’ve been building and strengthening our relationships with organisations representing all our customers - from trade bodies and trading standards, to local business forums and community advice centres. By continuing to reach out in this way, we can ensure that we’re involved in important conversations about what fairness means now.

And given that a sense of unfairness is at the root of so many of the disputes that reach us, it’s vital that both sides have confidence in the fairness of our own approach. We know that it isn’t enough for us just to hand down a solution that we think is fair. If we’re to help everyone move on, we need our answers to feel fair too.

For an independent organisation like ours - bringing together parties whose differences we’re finding to be increasingly entrenched - this is a growing challenge.

But it’s a challenge we’re meeting head on. Three quarters of consumers who used us this year said they would recommend us to their friends and family. And the same proportion of complaints handlers from financial businesses felt our decisions were fair and unbiased. These kinds of endorsements aren’t given lightly. The fact that they are given speaks to the pride our staff take in giving clear, honest answers that make a difference.

I don’t think this is only a result of the investment we’ve continued to make over the year in developing our people’s technical expertise. Perhaps more so, I think it reflects care we take in listening to both sides - recognising that, as this annual review shows, communication breakdown is behind so many of the complaints that reach us.

… providing insight to encourage fairness

In resolving hundreds of thousands of complaints each year, we’re afforded a window into a huge range of lives and livelihoods. After taking the time to listen - and to understand the feelings and sticking points on both sides of each dispute - we have a responsibility to use our insight to stop the same problems happening again.

Central to this is having strong, open relationships with the regulators. In the Financial Conduct Authority’s first few months regulating consumer credit businesses, our insight into payday lending helped to shape its response to that market - including measures to stop the worrying and unfair credit-broking practices that we found. And recognising the impact of claims managers’ activities on financial businesses as well as on consumers, we continued to share information with their regulator - which has now issued new rules to ensure higher standards.

We were again called on many times by policymakers this year - on the strength of our unique, independent insight into the nature of the relationships between financial businesses and consumers. I had my first appearance as chief ombudsman before a parliamentary select committee, explaining our perspective on fairness in financial services. And our conversations with the government - bringing our fifteen years’ experience of settling complaints out of court - helped to inform its strategy for implementing the EU directive on “alternative dispute resolution” (ADR).

Of course, our success in resolving complaints also depends on our positive relationships with the businesses we cover - and this year, we’ve continued to work through wide-reaching issues at a strategic level across the financial services sector.

But we know that it’s at the front-line that our insight can make a difference every day - in hundreds of thousands of individual situations. So over the year, we met complaints handlers, trade associations and small businesses serving local communities - to share experiences and answer their questions directly.

97% of people who came to our free, practical workshops told us they now have a better understanding of our fair approach to complaints - and I’m confident that many problems that might otherwise have been escalated to us were fairly resolved without the need for our formal involvement.

Our commitment to working openly goes beyond just having face-to-face conversations - to ensuring that our fair approach to complaints is permanently clear and accessible.

We’ve now made 60,000 of our ombudsmen’s decisions available on our website. We’ve continued to update our comprehensive online technical resource - setting out our long-standing approach to problems involving private medical insurance, powers of attorney and packaged bank accounts.

And in eight editions of our newsletter, ombudsman news, we’ve offered pragmatic support on issues ranging from lifetime mortgages to alcohol exclusions in travel insurance.

… be trusted and respected - as the people who listen and know what to do

Sharing our insight is one way of earning people’s trust. It’s also critical that we have, and are seen to have, the right knowledge and skills to give fair answers - whatever the nature of the situation we’ve been called on to resolve.

As this annual review explains, we’ve continued to invest in our people’s knowledge this year - something we know is central to our stakeholders’ confidence in us. This included sponsoring hundreds of professional qualifications and supporting people’s continuing professional development.

But simply having knowledge isn’t enough. So this year we continued to review and improve the way our staff share their knowledge. As part of this, we’ve established new ways of working that ensure we’re directing and applying our expertise in the most effective way for each individual situation.

And knowledge is about more than specific facts. All too often, we find that a consumer’s tentative question to a business has escalated to a “case” with us - because the business’s reply, while confirming the technical position, simply hasn’t got to the heart of why their customer is unsure or unhappy. That’s why we’ve continued to put equal weight on supporting our people in listening to and understanding different perspectives - and in reconciling these perspectives with fair, practical answers.

I’m reassured that the businesses we cover continue to trust us to reach the right balance of expertise and pragmatism. Of the complaints handlers we asked this year across the financial services sector, three quarters agreed that we get to the bottom of complaints. And our technical advice desk responded to well over 21,000 enquiries from people working in complaints - asking for our informal steer on how to put a problem right.

And it’s also reassuring that consumers seem to share this confidence. In our research this year, seven in ten members of the public said that they trusted us. At a time when attitudes towards financial services - as well as “official” bodies - remain uneasy, this is particularly important.

… be recognised as well-run and efficient

The wide range of financial products and services we cover - and our reputation as the people who know what to do - means we need to be ready to respond to whatever number and nature of complaints and concerns people bring to us.

In our plans for the coming year, we explain that these complaints and concerns arise from the course of everyday life. And the fact that everyday life is incredibly difficult to predict accurately has to be reflected in the flexibility of our plans.

But we know that the free service we provide to consumers has an upfront cost each year to financial businesses - who quite rightly expect us to show that we’re providing value for money. And as a business ourselves, we need to manage our finances in an accountable and sustainable way.

In 2014/2015 we froze the overall levy paid by the businesses we cover, and extended our group-account arrangement to a further four financial groups. And recognising that we receive far fewer complaints from customers of smaller businesses, we once again decided it was fair only to charge a case fee for the 26th and each subsequent complaint.

The cost of our service to the financial services industry is part of the cost of consumer confidence. And I’m pleased to say that, overall, the confidence that we provide cost the industry 26% less in fees in 2014/2015 than in the year before. We’ll continue to keep our funding arrangements under review - recognising that fairness must be central to these types of decisions, as well as to our decisions about financial complaints.

Of course, the new ways of working we’ve been developing over the last few years have our customers at their heart. Putting things right sooner rather than later can make a difference to lives and livelihoods - whether the person waiting for our answer is a small financial business or a consumer with an outstanding medical claim.

But I hope that, from the many examples in this annual review, the wider benefits will be clear. By getting involved in conversations taking place on platforms like Twitter and web forums, we’ve been able to clear up confusion quickly - or help get the parties talking to each other - avoiding the need for our formal involvement and all the costs that brings.

Like the businesses we cover, we must also ensure we’re running our organisation responsibly. Shortly before we published last year’s annual review, all our case handlers began using electronic case files - making 2014/2015 our first full paper-free year. And mindful of our wider environmental impact, we moved most of our staff under one roof in Tower Hamlets - after our home for the past fifteen years, South Quay Plaza, was bought for redevelopment.

We know that PPI still presents challenges for us. Despite several years’ hard work on our part putting right the large-scale fallout of mis-sold policies, some people are still waiting longer for our answer than they - or we - feel is acceptable.

As we show in the section the complaints we resolved, 11% of cases this means our PPI customers are waiting for over two years. And based on the cases we’ve settled this year, we anticipate that many of the 250,000 cases that we’re yet to resolve will be complex and entrenched.

But through focused investment of our time and resources - and honest conversations - we continue to make strong headway. This annual review explains the steps we’ve taken to make sure that consumers, businesses and claims managers are cooperating with us and with each other - so that everyone can finally move on from PPI.

… making sure we reach and help those who need us

Importantly, we haven’t let the unprecedented scale of PPI distract us from identifying and putting right unfairness elsewhere. Unlike financial businesses and claims managers who can choose their customer base, we’re a service for everyone in the UK. So our commitment to reaching and helping those who need us is central to how we go about our work - as well as to how we engage each year with the outside world.

Developments in the “consumer landscape” over recent years tell a number of stories. In some respects, people are interacting with services in increasingly individualised, informal ways - which for financial services, could mean anything from mobile banking to complaining on social media. And instead of “traditional” sources of information, many people are instead turning to alternative forums to raise concerns and to find common-sense answers.

For the ombudsman - as well as the businesses we cover - keeping pace with technology isn’t only a question of efficiency. It’s simply expected by our customers - and it’s critical to our remaining an inclusive, accessible service.

Since January 2015, approaching 10,000 people have told us about their complaint directly through our online digital platform. Of the complaints we received this year about payday lending, we resolved one in five using only our webchat service. And we continue to take part in conversations about fairness that are happening everyday in all sorts of online communities.

But at a time when levels of financial hardship remain stubbornly high - and a small but significant number of people remain “offline” - not everyone is able, or wants, to engage digitally with the businesses and services they use. This was again evidenced this year by the steady numbers of people who arrived at our office in person with carrier bags of paperwork.

And although enquiries to our consumer helpline remain at record levels, we know that certain groups and communities - for various reasons - are far less likely to know about and use our service. Behind every “referral” to us is an individual story about fairness - but equally important are the problems that we don’t see. It’s vital that we find out how the people who aren’t using us are articulating and responding to the problems they face - so we can understand where and how we can help them.

For this reason, our outreach team again met people at the front line of communities across the UK - at events ranging from practical workshops for trusted local advisers, to drop-ins with MPs at foodbanks and supermarkets. And we again appeared thousands of times in regional and community publications - putting our role in the context of local lives and livelihoods.

As a result of this ongoing work, four in five people have some awareness of us - compared with three quarters this time last year. Among certain groups of consumers - where we’ve focused our outreach activities - levels of awareness have risen by almost 40%. For their part, our employees continue to represent the diversity of UK consumers - and have continued to be ambassadors for our service within their own diverse communities.

… remembering what matters

Our commitment to reaching people who need us isn’t only about being there when things go wrong. Significantly, awareness of a free ombudsman can encourage people to engage with financial services in the first place - and to have the conversations they need to resolve problems themselves.

So while the charts and figures in this annual review give a useful statistical snapshot of different areas of our work, it’s important to take a wider view - to understand what they’re saying about consumer confidence, and about what fairness looks and feels like today.

This is particularly relevant in the year that, thanks to the European Directive on Alternative Dispute Resolution (ADR) that comes into force in the UK in July 2015, European businesses across all kinds of sectors will be able to offer their customers a way of resolving disputes “out of court” - fairly and informally - like the service we’ve been offering financial businesses and their customers for the last 15 years.

Since 2011 our workload has been dominated by PPI. And looking at this year’s numbers, it’s clear that this will be the case for some time to come. But I hope this annual review shows a forward-looking organisation - one that knows that heritage alone isn’t enough to maintain confidence, and that hasn’t let itself be defined by any one particular challenge.

In fact, I think we’re an organisation that’s managed to turn challenges into strengths - with more expert staff than ever before, and new ways of working that meet our customers’ high expectations of the services they use. With fairness at our heart, I’m confident that we’ll continue to meet these expectations in months and years to come.

Caroline Wayman
May 2015

photo: Tony Boorman

photo: Caroline Wayman

annual review 2014/2015

And if you can't quite make it through all 176 pages - you can see all the highlights in this handy 3 minute video.