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© May not be reproduced without permission of Financial Ombudsman Service Ltd 1
The Financial Ombudsman Service…..its role in complaint resolution
Ian Woodman
Relationship Manager
CILA – 29 October 2007
© May not be reproduced without permission of Financial Ombudsman Service Ltd 2
Financial Services Authority (the regulator)
Financial Ombudsman Service (adjudicates on unresolved disputes)
Financial Services Compensation Scheme(pays compensation if authorised firm is unable to pay claims against it)
background …
Financial Services andMarkets Act 2000
© May not be reproduced without permission of Financial Ombudsman Service Ltd 3
the role of the Financial Ombudsman Service
an independent service for resolving disputes between consumers and financial firms
to achieve a fair and reasonable outcome at the earliest possible opportunity
promotes dispute avoidance
can save time and expense of costly litigation
increases consumer confidence
© May not be reproduced without permission of Financial Ombudsman Service Ltd 4
FSA handbook
FEESchapter 5 funding arrangements
Dispute Resolution: Complaints (DISP)
chapter 1 treating complainants fairly (complaints-handling rules for businesses)
chapter 2 jurisdiction of the ombudsman
chapter 3 the ombudsman complaint-handling process
chapter 4 the voluntary jurisdiction
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complaint-handling rules
a business must:
have effective and transparent procedures for reasonable and prompt complaints handling
investigate complaints impartially
publish summary details of its complaints-handling process eg in a leaflet or the contract docs
summary details should explain that unresolved complaints may be referred to the Financial Ombudsman Service
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complaint not resolved by the following day
promptwritten
acknowledgement
keep complainant reasonably informed
8 week stage final response
&/or referral rights
complaint-handling rules …
if complaint sent to wrong business, it may forward it – promptly – to correct business & tell complainant in a final response
what businesses have to do…
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a final response …
is the business’s full response to the complaint
it should be in writing
it should set out its final view on the issue/the outcome of its investigation
give details of any offer and an explanation of how it arrived at the offer or its reasons for rejecting the complaint
must include ombudsman referral rights and leaflet
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what is an ombudsman complaint?
any expression of dissatisfaction (oral or written – justified or not)
involves an allegation that the complainant has suffered, or may suffer, financial loss, material distress or material inconvenience
(…that is not resolved by close of business on the business day following receipt)
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ombudsman’s remit
fair and reasonable, taking into account…
relevant law
regulations
regulators’ rules, guidance and standards
relevant codes of practice
good industry practice
…at the relevant time
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gathering the evidence
inquisitorial remit
consumers might need our help
complaint form completed by consumer
we will get to the crux of the dispute and will ask either side all the questions we need to
ample opportunity for both sides to submit their case
we read and listen very carefully
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3 stages
our process …
customer contact team1
adjudicators2
3ombudsman
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totalenquiries 627,814
enquiries converted to cases 94,392
to casework
to firm for resolution
early resolution
phone enquiries
341,455
customer contact team
jurisdiction checks
written enquiries 286,359
figures for year to 31 March 2007
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our process …
adjudicators2
94% of closed casesresolved by adjudicators
unable to resolve 8% of cases
through:• mediation• guided conciliation• formal adjudication
passed to an ombudsman for final decision
111,673 cases
resolved in year ending
31/03/07
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adjudicating
a formal decision might not be needed – a fresh pair of eyes can make a difference
can we mediate a settlement – maybe help both sides to see things in a new light?
experienced, fair minded adjudicators
where a more formal approach is needed the adjudicator will recommend a way forward – but tells the losing side first
ample opportunity to discuss or challenge
© May not be reproduced without permission of Financial Ombudsman Service Ltd 15
adjudicating
fair and reasonable outcome for each case
can look beyond strict legal position – discreet use
will use expert, independent evidence if needed
documentation or call recordings important
balance of probabilities where uncertainty exists
both firm and consumer can appeal to the ombudsman
…although less than 10% go to the ombudsman
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ombudsman considers
case afresh
final decision
cases
adjudicatorcannot
resolve
ombudsman – final decision3
ombudsman agrees with adjudicator
conclusions
ombudsmandoes not agree
return for further investigation
issue provisional decision
will hold hearingif necessary
(v rare)
or
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ombudsman decisions only necessary if parties do not accept adjudicator’s view
the final stage in the ombudsman service process
based on review of papers by a single ombudsman
no appeal to another ombudsman
final and legally binding if complainant accepts
complainant retains legal rights if rejects FD
judicial review – entitled but very rare
individual case decision but recognise desire for consistency
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redress
financial loss
distress, inconvenience, injury or damage to reputation
costs only in exceptional circumstances
£100,000 limit
recommendation above £100,000 not binding
ombudsman can instruct a firm to take ‘appropriate’ action
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briefly, what we are seeing…..
substantial drop in disputes about the sale of mortgage endowment policies compared to last year
welcome reduction in critical illness & PHI complaints
complaints about the sale of PPI increasing steadily over last 6 months
upward curve in motor complaints continued
buildings and contents numbers fairly stable….so far
no trends or spikes to report on property complaints
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type of complaint 2007 2006 2005
motor 4,230 3,372 2,571
building 1,951 1,951 1,624
travel 1,670 1,787 1,525
contents 1,238 1,224 1,145
income protection 891 1,103 980
loan protection 1,832 1,315 833
critical illness 680 799 717
other 3,238 2,719 2,089
total 15,730 14,270 11,484
general insurance complaints by product
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the value of loss adjusters
a crucial role
usually first on scene
early intervention and management is critical
communication is key
good, detailed reports are invaluable to us
some of the most ‘messy’ complaints could have been avoided with the early involvement of an adjuster
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but a note of caution…
sometimes it looks like you are just trying to cut costs
remember ‘good faith’ works both ways
the policyholder should be paid what they are due
make a fair offer first time – don’t ‘haggle’
we are looking for objectivity at all times
detail, accuracy and evidence is crucial
your reports carry huge weight for us
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www.financial-ombudsman.org.uk
news
frequently asked questions
printable complaint form
all our publications including case studies
special needs information
subscribe to receive regular news and updates by e-mail
resources available - our website
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resources available - firms only …
technical advice desk - informal guidance on our practice and procedures
020 7964 1400