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ombudsman news

issue 88

August/September 2010

ombudsman focus: more complaints data

In September 2010 we will be publishing the latest set of our complaints data relating to named financial businesses. The data will show the number of new complaints we received - and the proportion of complaints we upheld in favour of consumers - for each business that had 30 or more new cases (and 30 or more resolved cases) referred to us in the first half of 2010.

We first published this type of data - naming the 150 or so businesses that together generate around 90% of our complaints workload - in September 2009. This followed extensive public consultation - and the unanimous decision of our board to make this information publicly available, to encourage businesses to:

  • benchmark their standards of complaints-handling against others in the financial services industry;
  • learn from businesses who are handling complaints better; and
  • reduce the number of unresolved complaints referred to the ombudsman service.

Before this, the ombudsman service had already been making this information available privately to the largest financial services groups.

helping businesses with the data

In preparation for publishing this type of data, we worked closely with financial businesses, trade associations and consumer groups - to explain our approach and to work through the practical issues. This included setting out the background and reasons in our policy statement, publication of complaints data: what we will do (March 2009) and publishing answers to the most frequently-asked questions on this topic (under 'complaints data' in the publications section of our website).

We also produced a guide for businesses, explaining the practicalities involved. This ombudsman focus summarises that guide, to remind businesses how, why and what we will be publishing in September.

the names of businesses

We publish the data in tables that list alphabetically the relevant 'legal entities' against which the complaints are recorded. These 'legal entities' are FSA-regulated firms and/or OFT-licensed credit businesses. Complaints are not recorded against the trading names or brands that these 'legal entities' may trade under - and they are not recorded against any larger group that the 'legal entity' might be part of. But because some trading names and group names are more recognisable than the 'legal entity' behind them, we also:

  • Provide a list of the trading names used at the end of each period by each of the legal entities covered by our complaints data. This list of trading names comes from the FSA. Firms are required under the FSA's Handbook (under SUP 15.5.1(2)) to give the FSA advance notice of any changes in the names they may trade under.
  • Show for each 'legal entity' the name of any larger group which it formed a part of at the end of the relevant period. This list of groups also comes from the FSA. Because the columns of data in the complaints tables are sortable (by clicking the triangle symbol), a user can sort the data by group, which brings all the relevant 'legal entities' together.

To ensure that the data - particularly the data about the proportion of complaints we upheld in favour of consumers - is statistically meaningful, we exclude from the published data any 'legal entity' that did not have at least 30 new cases and 30 closed cases during the relevant six-monthly period (even if it formed part of a larger group). This means that the data we have published so far has covered around 150 legal entities that together make up around 90% of our caseload.

the number of new cases

The number of new cases shown in the complaints data is the number of new chargeable cases during each relevant period. Our computer system counts them as part of the process, when a complaint enquiry becomes a (chargeable) case. At the same time, our computer system generates a 'case-conversion' letter to the 'legal entity' concerned - so financial businesses can keep a tally of the number of new cases by totalling the case-conversion letters, using the date of the letter rather than the date of receipt.

The case-conversion letter:

  • tells the financial business that a complaint has become a chargeable case;
  • asks for the relevant papers; and
  • requires the financial business to point out (within 21 days) if the letter should have been addressed to another business.

If a financial business thinks the new case should be recorded against another 'legal entity', the financial business should say so when it receives the case-conversion letter - not later. And financial businesses in a larger group should always use the correct letterhead when responding to consumers.

the proportion of complaints upheld

This data is based on cases where there has been a decision, or a settlement, on the merits of a particular complaint. It excludes cases that were out of jurisdiction or withdrawn. Our case-closure letter says if we have recorded the case as 'change' or 'no change'. The case-closure letter is generated as part of our case-closure process, after the ultimate decision has been issued. The data is based on resolved cases closed during the relevant six-month period.

In the vast majority of cases, the case-closure letter will have the same date as the date the case was closed. Where cases have been settled by an ombudsman's final decision (around 10% of all the cases we resolve), the date of closure is the date of the final decision.

Financial businesses can keep a tally of the percentage by totalling the 'change' and 'no change' case-closure letters. The published percentage will be equivalent to 'change' letters as a percentage of the total of 'change' and 'no change' letters.

In deciding whether the outcome is 'change' or 'no change', we compare:

  • the final outcome for the consumer when the resolved case was closed; with
  • the outcome for the consumer according to the last response from the financial business before our case-conversion letter.

If the final outcome for the consumer was better (whether by a large or small amount), we treat that as 'change'. This includes where the financial business made an improved offer or agreed an improved settlement after our case-conversion letter. Businesses should not wait to see if a consumer refers a complaint to the ombudsman service before making a proper offer.

If (after checking how we classify 'change') a financial business disagrees with the outcome that the case-closure letter says we have recorded in a particular case, the business should write back to the adjudicator straight away. If the financial business and the adjudicator are unable to agree, the issue will be escalated and a manager will check the recorded outcome.

showing the complaints by product groups

As well as showing total figures for each 'legal entity' covered in the complaints data, we agreed - following consultation - to break the figures down across the five product groups that the FSA uses for publishing complaints data. But we do not show the uphold rate for any product group where a particular business has fewer than (the statistically meaningful) 30 closed cases. To be consistent with similar data that the FSA publishes, the five product groups we show are:

  • banking
  • home finance (including mortgages)
  • general insurance and pure protection
  • decumulation, life and pensions
  • investments.

There is a table in the 'complaints data' section of our website that shows how the various product codes we use 'map' to the five product groups used by the FSA.

putting the complaints data into context

During 2008 we brought together a group of representatives from industry trade bodies, consumer groups and the FSA - to see whether they could agree how market-share could be measured and published as a way of providing a wider context to the complaints data we publish.

This group of trade and consumer stakeholders subsequently acknowledged that it was not practicable for the ombudsman service to 'contextualise' complaints data against market share in a fair and meaningful way - either across different financial sectors or even within sectors. The report from this group, summarising its findings about 'contextualising' our complaints data, is available in the 'complaints data' section of our website. This does not, of course, prevent trade associations or individual financial businesses providing information themselves, to try to put data from our complaints tables into context.

checking the data

Our internal auditors, KPMG, have checked the systems we use for recording complaints data. They also check the data before we publish it on our website. We give advance warning, to each of the businesses concerned, of the data we will be publishing about them. This is on the understanding that they keep this information confidential until the data is published on our website. We do not provide businesses with background data or lists of individual case-reference numbers. This would not be practicable, given the large number of cases involved.

accessing the data

The tables of complaints data for named businesses can be accessed through the 'complaints data' page in the publications section of our website - where there is a range of other information about the complaints we deal with (including quarterly product-related complaints data published in Ombudsman news).

The complaints data showing named businesses comprises two tables - one for new cases received and one for resolved cases. These tables list (in sortable columns):

  • the name of the financial business ('legal entity')
  • the name of any larger group to which it belongs
  • the total number of cases for the financial business
  • a breakdown according to the FSA's five product groups.

On the chart showing new cases received, the explanatory notes point out that larger businesses are likely to have more cases than smaller businesses. However, the industry and consumer working group, set up to explore this issue, was unable to come up with a workable way of comparing complaints data directly to market share.

On the chart showing resolved cases, the explanatory notes also point out:

  • There is a time lag between receiving a new case and resolving it. So the cases resolved during the period are not all the same as the new cases received during the period.
  • The time lag varies from case to case. So the figures for the outcome of cases in a single period may not, on their own, be significant - but the trend over several periods could be.
  • Cases that have taken a longer time to resolve may not necessarily represent the most recent performance of a financial business's in-house complaints handling.

Some cases may relate to things done by a predecessor financial business, taken over by the financial business against which the case was brought.

The chart for resolved cases also shows - for comparison purposes - the average uphold rate for all resolved cases in the relevant period (relating to all businesses, including those below the 30-cases threshold) - both in total and broken down according to the FSA's five product groups.

The FSA's complaints data

Separately, the Financial Services Authority (FSA) publishes data showing the total number of all complaints received by the firms it regulates. This is data which firms are required to report to the FSA every six months. The data we publish shows only those complaints that consumers refer to the ombudsman service if they are still unhappy after they have first complained to a firm.

In January 2010 the FSA also confirmed that it would be requiring individual firms to publish their own complaints statistics by 31 August 2010 - with the FSA then publishing its first consolidated set of data about named firms in the autumn of 2010.

In issue 85 of ombudsman news we confirmed that we will be reviewing our own arrangements for publishing complaints data in 2011. By that time, stakeholders will be better placed to see the whole picture - from both our data and the FSA's - and to comment accordingly.

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For printed copies of this or any of our publications, phone 020 7964 0092 or email publications.

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.