1. © 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

2. © 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 and Markets Act 2000

3. © 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

4. © May not be reproduced without permission of Financial Ombudsman Service Ltd 4 FSA handbook FEES chapter 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

5. © May not be reproduced without permission of Financial Ombudsman Service Ltd 5 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

6. © May not be reproduced without permission of Financial Ombudsman Service Ltd 6 complaint not resolved by the following day prompt written 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…

7. © May not be reproduced without permission of Financial Ombudsman Service Ltd 7 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

8. © May not be reproduced without permission of Financial Ombudsman Service Ltd 8 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)

9. © May not be reproduced without permission of Financial Ombudsman Service Ltd 9 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

10. © May not be reproduced without permission of Financial Ombudsman Service Ltd 10 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

11. © May not be reproduced without permission of Financial Ombudsman Service Ltd 11 3 stages our process … customer contact team 1 adjudicators 2 3 ombudsman

12. © May not be reproduced without permission of Financial Ombudsman Service Ltd 12 total enquiries 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

13. © May not be reproduced without permission of Financial Ombudsman Service Ltd 13 our process … adjudicators 2 94% of closed cases resolved 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

14. © May not be reproduced without permission of Financial Ombudsman Service Ltd 14 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

15. © 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

16. © May not be reproduced without permission of Financial Ombudsman Service Ltd 16 ombudsman considers case afresh final decision cases adjudicator cannot resolve ombudsman – final decision 3 ombudsman agrees with adjudicator conclusions ombudsman does not agree return for further investigation issue provisional decision will hold hearing if necessary (v rare) or

17. © May not be reproduced without permission of Financial Ombudsman Service Ltd 17 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

18. © May not be reproduced without permission of Financial Ombudsman Service Ltd 18 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

19. © May not be reproduced without permission of Financial Ombudsman Service Ltd 19 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

20. © May not be reproduced without permission of Financial Ombudsman Service Ltd 20 type of complaint200720062005 motor4,2303,3722,571 building1,951 1,624 travel1,6701,7871,525 contents1,2381,2241,145 income protection8911,103980 loan protection1,8321,315833 critical illness680799717 other3,2382,7192,089 total 15,73014,27011,484 general insurance complaints by product

21. © May not be reproduced without permission of Financial Ombudsman Service Ltd 21 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

22. © May not be reproduced without permission of Financial Ombudsman Service Ltd 22 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

23. © May not be reproduced without permission of Financial Ombudsman Service Ltd 23  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

24. © May not be reproduced without permission of Financial Ombudsman Service Ltd 24 resources available - firms only … technical advice desk - informal guidance on our practice and procedures technical.advice@financial-ombudsman.org.uk 020 7964 1400

25. © May not be reproduced without permission of Financial Ombudsman Service Ltd 25 any questions now or later?