Of The Financial Ombudsman Service

Author: THR

Lord Hunt of Wirral publishes his independent report into the Financial Ombudsman Service: “Opening Up, Reaching Out and Aiming High”

Today I publish the outcome of my independent review into the Financial Ombudsman Service (FOS), in which I call on the FOS to be much more open and transparent. It must also improve its outreach activities and go back to basics, refocusing on its founding principles of speed, informality and independence.

I should now like to see the FOS evolve into an authentic “one-stop shop” for individuals with legitimate complaints against financial services firms, along the lines well established in local government and elsewhere. As matters stand, I believe the FOS still looks too much like a middle-class service, for middle-class people. To become truly accessible, the FOS must endeavour to change this perception.

The Report runs to over 34,000 words and contains 73 conclusions and recommendations. I hope it builds successfully both upon the much excellent work that the FOS is already doing and also upon the very robust foundations laid by the previous independent review, undertaken by Professor Elaine Kempson and her colleagues from the Personal Finance Research Centre at Bristol University.

I believe the FOS Board is to be congratulated for commissioning such reviews and, in this particular instance, for giving me so clear a focus on issues of accessibility and transparency, the vital importance of which became increasingly apparent as my work progressed. Throughout this process, my presumption has been in favour of making much more information publicly available, enhancing transparency wherever possible and making the FOS itself more approachable and accessible.

If my conclusions are accepted and my recommendations implemented, I believe the demographic profile of those using the FOS should, must and will broaden, as the organisation thinks not only in terms of its traditional areas of activity – dealing with matters such as mortgages, insurance and pensions products – but also in terms of the problems that typically afflict our less affluent citizens.

Difficulties with debt management are only likely to increase in scale and numbers as the current economic difficulties mount. In many instances the sums of money involved will be on the low side by FOS standards, but the human misery attendant upon them can be devastating. Accessibility is no abstract concept.

My principal recommendations are as follows:

  • *  FOS should make a significant, and properly targeted and evaluated, increase in investment in communication.
  • * The FOS should commission a more “user-friendly”, readily understood and enticing trading or brand name (or names) to convey its activities to the public more effectively, whilst also clearly retaining its role and legal identity as an ombudsman service. The “Financial Complaints Service” may be an appropriate starting point.
    *  The FOS should provide a phone line service between 8am and 8pm on weekdays and on Saturday mornings; ensure that out-of-hours callers can leave their details by means of voicemail or text, requesting a call back; and offer a freephone service, at least for initial enquiries and complaints.
  • * The FOS should develop and pilot a “case adviser” system, to ensure that vulnerable consumers feel confident about using the FOS dispute resolution service.
  • * The FOS should identify how best to “fast track” complaints on consumer credit, which, although of relatively low value, are often of pressing urgency to complainants; take every opportunity to remind firms that the first expression of dissatisfaction by a customer marks the start of the initial 8-week complaint period; and press regulators to shorten the 8-week deadline for companies to resolve simpler debt- and credit-linked complaints
  • *The FOS should develop regular, independently-edited selections of anonymised case reports and a new interactive “FOSBOOK” system, to provide comprehensive data on its approach to families of cases and to facilitate regular, informal two-way feedback.
  • * As a first step, the FOS should publish more in the way of anonymised, benchmarked data, alongside a new award scheme to identify and reward best practice, matched by a “wooden spoon” for the worst performers. It should also work with the FSA to ensure that more robust, company-specific data is made available for complaints handling within all parts of the system.
  • *There should be no case fees chargeable to complainants.
  • * There is no need for an external appeals process.
  • *The recent reconstitution of the FOS Board presents an excellent opportunity to reinvigorate and extend the role it plays. I sincerely hope the FOS takes full advantage of the talent it has at its disposal.

I believe these recommendations, in combination with all the others in my Report, will bring about a true openness revolution at the Financial Ombudsman Service, to the considerable benefit of everyone within it, and also everyone who has occasion to deal with it. The FOS has a great opportunity to build upon its already considerable achievements, building an even better model for the future. I hope it will demonstrate the necessary leadership and ambition to seize that opportunity with enthusiasm.

Accessibility and transparency


Lord Hunt of Wirral MBE today launched his review of the Financial Ombudsman Service (FOS) with the publication of a detailed “call for evidence” report [PDF version opens in new window].

The document describes how the FOS currently seeks to make itself accessible to all possible complainants and small businesses. It also sets out the information about individual cases and complaint trends which is currently in the public domain and asks a range of detailed questions about possible options for the future.

Lord Hunt said

“The Financial Ombudsman Service is an important resource for UK PLC. It seeks to help over 500,000 people directly each year. By influencing business practice, it can potentially help many more.

“To achieve this, it needs to be readily accessible to all consumers, particularly more vulnerable ones, and to listen and communicate effectively with an ever growing number of businesses. My review will assess how well it is doing this and point to any areas of improvement.

“So I want the Review to stimulate wide ranging debate amongst industry and consumer groups about the effectiveness of what the FOS does at present, where it should build on current progress and where practice might change. I am particularly interested in potential lessons from other sectors and organisations.

“The document that I am publishing today is the start of that debate. The questions I am asking about priorities for communication, the needs of specific groups and the publication of individual decisions and more general data on the outcome of complaints are designed to focus attention on some key areas, rather than to be an exclusive list. I’m also allowing a full three months for input to ensure that everybody has the maximum opportunity to participate.

“My aim is to produce concrete recommendations in the first quarter of next year. These may range from short-term suggestions, capable of early implementation by the FOS, to more strategic proposals, which will help to determine its direction in the medium-term.  

“I greatly welcome the early expressions of support and interest in the Review from many stakeholders. In particular, I am grateful to the offer from the All Party Group on Financial Services to host a series of meetings to inform its own input to my work.  I look forward to working with all interested groups in framing my recommendations.”

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