ALL HANDS ON DECK
WORKING WITH THE FINANCIAL OMBUDSMAN SERVICE

FOS

At the Financial Ombudsman Service, we’ve been working hard to deliver faster results for complainants and firms without compromising on the quality of our decisions. We are building the service that our customers need and rightly expect, with the flexibility and capacity to deal with the changing landscape in financial services and beyond.

Comparing the first half of 2023-24 to the first half of the previous year, we’ve reduced the average number of months we took to resolve cases from 4.8 to 3.2 months; we resolved 56% of cases in three months, up from 30%; and we resolved 82% of cases in six months, up from 55%. We want to do better, and for that we need the cooperation and support of firms.

We recently wrote to firms explaining how they should work with us to resolve complaints. Some of the key points identified for building an effective working relationship with our Service include:

• Sharing early insight with us on complaint volumes – particularly unexpected spikes – helps us ensure the right cases are resolved at a firm’s front-end, and that only the cases that need to come to us do so.
• Providing files and information to us in a timely manner – means we can get cases resolved quicker and more efficiently. We are now allocating and progressing complaints much more quickly than was the case, but we can only do that when we get a firm’s side of the story as early as possible in the process.
• Helping us to understand a firm’s perspective – in particular, firms being prepared to ‘show their working’, explain the decisions they’ve made and provide supporting evidence so that we can properly take that into account.
• Learning from decisions that go against firms – firms might not agree with our decisions and there are processes to formally challenge them where appropriate. But where our decisions stand, firms need to apply the lessons to their business and the way they handle complaints – as required byDISP rule 1.3.2A in the FCA’s Handbook.
• Engaging effectively with professional representatives –including claims management companies. Our experience is that where firms take an adversarial approach to representatives, this just makes things worse – leading to more complaints, higher case fees and higher uphold rates.

We understand the concerns that firms raise with us about professional representatives, and we’ve sent them a separate letter setting out our expectations of them when they refer complaints to us. We work with representatives to ensure that they are bringing only the right complaints in the right way – for example, we’ve prevented thousands of cases from coming to us and incurring charges by making sure that representatives have worked with the relevant financial services firm first. Where concerns or issues remain, we share insights and information with representatives’ regulators.

Speaking of regulators, we have done a lot of work with the FCA, along with industry and other stakeholders, to get ready for the Consumer Duty. Like firms, we are ultimately a recipient of the Duty and we are taking our lead from the FCA on what it means in practice. But where the FCA hasn’t taken enforcement or supervisory action, that doesn’t mean that we will automatically reject complaints to our Service – the FCA are likely to focus initially on firms that aren’t doing the necessary work to comply with the Duty, whereas we look at all the complaints we get.

Firms should be ready to respond to customer complaints where the Duty is relevant, because that will affect what complaints then come to us. When a firm is thinking about how to explain its decisions and ‘show their working’ – that should include setting out how they’re complying with the Duty where it applies. Hopefully, the work firms have done to assess how the Duty affects them will stand them in good stead here and give them helpful material to draw on.

We have started to see complaints where the Duty has been raised, but we don’t expect the Duty to lead to immediate and wide-ranging changes to the outcomes from our work. It doesn’t apply retrospectively to complaints involving acts or omissions from before 31 July this year, and it’s underpinned by concepts of fairness and reasonableness that are familiar territory for us. In many areas, it has clear comparisons and overlaps with regulatory standards that are already in place.

We have started to see complaints where the Duty has been raised, but we don’t expect the Duty to lead to immediate and wide-ranging changes to the outcomes from our work.

We are looking to identify complaints where the Duty is relevant and progress them at pace. That will mean that we can share insight and lessons from these cases with firms – another example of how we can work collaboratively so that everyone gets the right outcomes from our Service more quickly.