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corporate plan and 2008/09 budget

January 2008

how we delivered our corporate plan in 2007/08

The corporate plan we published in January 2007 summarised our overall aims as:

  • continuous improvement of our processes and systems, so that they remain capable of delivering a cost-effective redress service which meets ever-rising expectations;
  • managing staff and other resources so as to provide an efficient and effective service, irrespective of future fluctuations in numbers and types of cases;
  • enhancing dialogue with our stakeholders so that we remain responsive to their needs and to the public interest, while continuing to provide an impartial service; and
  • helping to secure wider public benefits by using our expertise and resources to help enhance and extend accessible and effective dispute resolution.

These aims were translated into a plan of things to do over the following three years. This plan evolved during the year to include work on the restructuring of our service, in line with future workload needs. Casework trends are covered by chapter 6. Other things we did during 2007/08 towards delivering the agenda included the following:

  • Our new consumer credit jurisdiction opened on 6 April 2007. We continued to work with trade associations and consumer advisers to increase awareness, among both businesses and consumers, of how this new jurisdiction applies and works. Under the relevant legislation, the consumer credit jurisdiction only covers events from 6 April 2007 onwards, so the build-up of cases has inevitably been gradual.
  • We have maintained close relations with other bodies which have associated public-interest responsibilities. These included the government departments and regulators most directly connected with financial services and consumer credit - principally: HM Treasury; the Department of Business, Enterprise and Regulatory Reform; the FSA; and the OFT. We have also assisted a number of other public bodies that are responsible for redress schemes (nationally and internationally) and that have looked to the Financial Ombudsman Service model in designing their schemes.
  • We worked closely with our associated regulators, so far as this is consistent with our independent role and separate statutory responsibilities. The OFT, the regulator of consumer credit, joined the 'wider implications process' we had previously operated jointly with the FSA. This process is designed to manage any overlaps between our respective roles in a structured and transparent way. The process was updated in the light of experience and republished on shared web-pages. We also agreed and published updated memoranda of understanding with both the FSA and the OFT.
  • The FSA aims to simplify its rulebook and make it more principles-based. A key factor in this is the existence of the ombudsman service to deal with individual consumer complaints. This enables the FSA, as regulator of financial services, to focus its resources in a risk-based, outcome-focused way. We worked closely with the FSA in relation to a number of practical issues relating to its move towards more principles-based regulation; its treating customers fairly programme, and its retail distribution review - which is considering the future shape of the market for the retail sale of investments and savings.
  • In line with the FSA's aim to simplify its rulebook, we worked together with the FSA to write, and publish for consultation, a new version of the rules governing how complaints are handled by individual businesses and by the ombudsman service. Besides allowing for the requirements of the European Markets in Financial Instruments Directive (MiFID), this new version makes the rules shorter and easier to follow. Together with the FSA, we are currently considering the consultation responses and we plan to publish a joint policy statement in the first quarter of 2008.
  • MiFID is one of the signs of increasing globalisation of financial services. So the handling of cross-border complaints assumes increasing importance. For example, when PayPal relocated from the UK to Luxembourg it elected to remain covered by the ombudsman service on a voluntary basis, in order to maintain the confidence of its English-language customers throughout Europe. We launched a consultation about extending our voluntary jurisdiction to a wider range of services directed at the UK from elsewhere in Europe. And consumer information is now available on our website in 20 languages.
  • We continued to work with FIN-NET, the European network of financial dispute-resolution bodies which we helped to found in 2001, in order to facilitate improvements in the handling of cross-border cases. And our position as the world's largest independent service for the resolution of financial disputes was well-illustrated by the fact that a conference we organised on the the resolution of financial disputes was attended by delegates from 32 countries in six continents. The Economic Secretary to the Treasury took the opportunity presented by the conference to announce the five principles which will in future shape the UK government's approach to the development of financial services in Europe.
  • We cooperated with the Law Commission and the Scottish Law Commission in their review of the law on misrepresentation and non-disclosure in relation to insurance contracts. In particular, they were able to study (under conditions of confidentiality) a range of cases with which we had dealt. This led to their publishing a consultation paper on the law applicable to consumers, with recommendations which largely reflect FSA rules and ombudsman service guidelines.
  • We completed the work planned for our smaller-firms taskforce, and implemented the system and information changes it recommended - including creating a special section on our website to answer the questions that smaller firms might have. We launched two new taskforces: our accessibility taskforce to examine the accessibility of the ombudsman service to consumers and businesses generally; and our 'joined-up information' taskforce to review how we structure and align the information we produce, both internally and externally, about our approach to different types of financial complaint.
  • Our accessibility taskforce aims to ensure that our service is accessible to everyone, whatever their needs may be. This has included identifying and acting upon potential barriers to accessibility, as well as undertaking targeted initiatives with groups that are under-represented in our caseload - such as Asian consumers, young people, migrant workers and younger women. It has also included setting up a dedicated group to look at issues affecting disabled users.
  • Our work on accessibility and on information will be informed by the results of the three-yearly independent external review. We said we would ask this to look, in particular, at whether we should be doing more to be visible and accessible to those we serve, and whether we are making the most effective use - for the benefit of consumers, industry and regulators - of the information and experience gained from our work. The review is being led by Lord Hunt of Wirral, who has published his call for evidence at and is meeting key stakeholders. We look forward to receiving his report in the early part of 2008.
  • We continued our programme of external liaison work designed to help reduce the causes of complaints and encourage the resolution of more complaints before they reach the ombudsman service. This included, in a year: answering more than 15,000 enquiries to our technical advice desk (for businesses and consumer advisers); taking part in more than 150 conferences, training workshops and events; dealing with more than 400 enquiries from Members of Parliament and more than 3,500 calls from the media; and issuing more than one million leaflets and other publications.
  • In September 2007 we started our restructuring programme. The aim, by March 2008, is to have reshaped the organisation's structure and reduced staffing to the levels required for our expected workload in 2008/09. This programme is being carried out in full consultation with employee representatives, and aims to maximise the number of voluntary redundancies in order to minimise the number of compulsory job losses. The restructuring programme is designed to ensure that we retain the skills needed for future work, while maintaining the values and service standards that our stakeholders rightly expect of us.

Meanwhile, we continued to handle large numbers of enquiries and cases. Our workload was swollen for a time by a surge of cases about charges for unauthorised overdrafts. At one stage, we were receiving eight times the usual number of new banking cases. Applying the lessons of earlier complaint surges, we implemented contingency plans, including shift-working and the use of a specially-tailored computer system, that enabled us to process these enquiries and cases without developing a significant backlog.

For some time, the banks and building societies concerned settled all these complaints about charges for unauthorised overdrafts. We were therefore not called on to decide the key issue of whether or not the charges were lawful - although we did make findings against businesses which closed accounts simply because consumers made a complaint. The OFT's announcement of a court case to test the legal principles on which such disputes turn, and the associated decision by the FSA, allowing businesses to suspend their handling of complaints in relation to these charges, meant that new cases were subsequently placed on hold, pending the outcome of the court case.

We carried out a wide-ranging programme of work to ensure continuous improvement in the way we handle enquiries and cases. These initiatives included the following:

  • We continued the review of our enquiry-handling and case-handling processes and systems. This is a major three-year programme, running through to 2009, to enhance our core IT systems and business processes. The aim is to improve the handling of cases (both individually and in bulk); bolster the consistency, quality and user-friendliness of our service for consumers and businesses; and 'future-proof' our systems and processes for the different types of case that might arise.
  • We completed the roll-out of significant new customer-contact computer and telephony systems. These will provide increased flexibility, security, resilience and scalability, as well as enhancing our capability to provide our service in new and different ways. We also reviewed and tested our disaster recovery and business continuity plans to ensure they remain robust, in line with new and increased risks.
  • The scope and coverage of our quality assurance systems was extended, by conducting more random reviews of cases to ensure we were attaining the standards expected of us. And we have enhanced our programme of consumer and business satisfaction surveys, ensuring that we listen to and understand the views of our users - both consumers and businesses.
  • We launched our sharpening the focus programme. This reinforces the importance we place on each member of our staff taking personal responsibility for delivering a service which recognises the needs of the individuals and businesses involved in the cases we deal with.
  • We continued work on a number of initiatives aimed at improving our output. These have included work to help us match resources to workload as different types of case rise and fall, with regular reviews ensuring that service standards are maintained across the service. We used contract staff for some work that was likely to decline, and have released them as part of the restructuring programme. And our new skills database is improving the efficiency of HR processes and enabling us to deliver more flexible resourcing policies.
image of corporate plan and 2008/09 budget

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