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ombudsman news

issue 62

June/July 2007

ombudsman focus - complaints-handling and the smaller business

Generally, the Financial Ombudsman Service tends to uphold proportionately fewer complaints against smaller businesses than it does against larger firms. Our lead ombudsman for investment, Caroline Mitchell, talks about some of the possible reasons for this, and the successful approach that many smaller businesses are taking to complaints-handling. She also outlines the practical assistance available to them from the ombudsman service.

who are we talking about when we refer to 'small' businesses-

We don't just mean independent financial advisers. We're also including mortgage brokers, general insurance brokers, smaller building societies, fund managers and stockbrokers. Then, too, there are a wide variety of what you might call 'occasional' users of the ombudsman service, including - for example - many businesses with a consumer credit licence who only do financial services work 'on the side' - as an adjunct to their main line of business.

The actual size of the business itself is irrelevant. It's really about how many complaints - and how much direct contact - a business has with us.

it's evident that some businesses have more difficulties than others in viewing complaints positively and constructively. Is this a particular issue with smaller businesses-

Complaints happen whatever business you're in, regardless of size. And there's always something you can learn if you're able to stand back a little and take a practical approach. I'd say that smaller businesses are generally pretty good at seeing the bigger picture.

It's important not to take things personally. That can be difficult if you're a small operation and you've worked long and hard to build up a good relationship with your customers. It can be a particular challenge if - as will be the case for many small businesses - the person being complained about is also the person who's responding to the complaint.

We see cases where advisers and their clients have had a very long-standing business relationship. If that breaks down, the complaint can get very personal, with unhelpful accusations and recriminations on both sides. Luckily, most advisers deal with complaints very professionally. They're the ones who retain their clients afterwards!

Indeed - by dealing effectively with a complaint they can even strengthen the relationship. By being objective and by working with us from the start, many smaller businesses are very successful at preventing their customer's problems and concerns from ever escalating into full-blown disputes.

A lot of smaller businesses are quick to see the practical advantages of our service. They know we're here to help solve problems, and that means we're helping them as well as their customers. They accept that unresolved customer complaints have got to go somewhere, and by-and-large we're quicker, more predictable and significantly more cost-effective than the courts.

And of course, because we're a private dispute-resolution service we handle complaints in confidence. This reduces the possibility of potentially damaging publicity associated with legal action in the local court.

the ombudsman service has been focusing over the past year on how it communicates with smaller businesses - why's that-

It makes sense to try and ensure all the businesses we cover are fully aware of how we operate and how we can help. It's a fact that ten of the UK's largest financial services groups accounted for over half of our workload in the past year. So if you're dealing with complaints in one of those big firms, you'll be in pretty regular contact with us and be well up to speed with how it all works.

We don't have that same degree of contact with the businesses that rarely have complaints referred to us - the 'smaller businesses'. But their customers have just the same right to bring a complaint to us as the customers of the larger firms. We want to be sure our process works as effectively for smaller businesses as it does for those that have quite a high volume of complaints. So last year we set up a high-level internal taskforce to help us focus on the different needs and concerns of smaller firms and on how best we can accommodate them.

what's happened as a result-

One of the things we did was some phone-based research. It really helped us see things from the perspective of smaller businesses. There were also a number of other projects and initiatives. In response to the comments and suggestions we received from smaller businesses, we've adapted some of our procedures. For example, businesses who have several different complaints with us at the same time now have the option of having these cases coordinated by a single adjudicator. That's something a number of smaller businesses said they'd find useful.

Other initiatives include the new section of our website, answering the hundred questions most frequently asked by smaller firms. We also introduced the series of quick guides which are available for downloading from the website.

do smaller businesses need a more individual approach from the ombudsman service-

We've always done our best to be flexible and to work in a way that meets individual needs, regardless of the size of business concerned. For example, when looking into a complaint we'll often be in fairly frequent contact with a business. Some people don't like us emailing them, while others prefer a quick email or phone call to a long letter. So if a business finds it more helpful for us to contact them in a particular way, we'll do that - it only has to tell us.

Our commitment to regional outreach - getting out and about and visiting businesses in their own local areas - is a good example of how we try to listen to the needs of smaller firms.

We recognise it's not usually practical to expect people to travel far if they have a small business. And we know that many smaller businesses take part in their own regional forums and have close-knit networks as a way getting together to discuss matters of mutual concern and share experiences. So we will often offer to go out and talk to groups of businesses. We're more than happy to meet businesses across the UK in this way whenever we can.

We also run regional seminars and go out and about with our roadshows. The people we meet seem to appreciate that we've made the effort to get out to see them - it's reassuring to find we're not distant figures in an ivory tower!

you said many smaller businesses seem to be good at preventing customers' problems from escalating and becoming formal complaints.

Yes. This is something the ombudsman service has always been keen to encourage. It's certainly the case that small businesses tend to make great use of our technical advice desk - the service we provide for businesses and consumer advice agencies, where we offer information and informal guidance on complaints-related issues.

Our technical advice desk can act as a sounding board, letting businesses know informally if their proposed solution to a particular problem appears to be fair and likely to resolve the problem. Or we can suggest ways of dealing with particular issues that we know other businesses have found effective in similar situations. Bear in mind, we've seen thousands of complaints. Often, the same issues affect similar firms across the UK. It's rare that we've not seen a complaint before about a particular issue or product.

Many smaller businesses tell us they find ombudsman news a very useful resource. The case studies give concise illustrations of our approach to a wide range of different complaints. There's also a huge amount of practical information on our website.

Most of the businesses I deal with seem to appreciate that we're not actually a huge, faceless bureaucracy - we're human beings and they can pick up the phone and talk to us. An IFA recently commented on just that, when I contacted him directly to sort out some practical issues arising from a decision I'd made - involving some pretty technical calculations.

Sometimes I'm contacted by a business that's unhappy with a decision made on an investment-related dispute by one of my team of ombudsmen. I have to explain that I cannot overturn an ombudsman's decision. What I can do is explain or elaborate on our approach - and that generally means we get a constructive response in return. Anything that leads to greater all-round understanding can only be a good thing.

Photo: Caroline Mitchell, lead ombudsman

photo: Caroline Mitchell, lead ombudsman

ombudsman news issue 62 - [PDF format]

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.