Yesterday Natalie Ceeney, Chief Ombudsman, set out her vision for how the financial services complaints and redress system can be improved. Her speech came at an interesting time as the performance and powers of FOS are under scrutiny as never before.
Ms Ceeney expressed her view that (post-PPI) the current redress framework “is largely fit for purpose“. Ms Ceeney cited the facts that, despite the time taken, the issue of PPI is now resolved; there has been a fall of 21% in the number of complaints received and the demographic of people bringing complaints to FOS indicates it is a service which is increasingly considered accessible by consumers.
However, Ms Ceeney did acknowledge that there was room for change:
1. Improve complaints handling and learn from complaints
The FSA has banned the ‘two-stage’ approach to complaints handling. Firms are required and encouraged to listen and learn from complaints and consider them insightful customer feedback.
2. Close the gap – real and perceived – between complaints and legislation
Commending the Government’s draft legislation and the FCA’s approach document, Ms Ceeney called for regulators to respond more quickly and proactively where individual complaints identify issues of ‘mass detriment’.
3. Expand transparency of the regulatory and oversight process
Ms Ceeney welcomes the proposal to publish reports on all Ombudsman determinations and wants to see better consumer understanding of the complaints process so media and consumer analysis can distinguish between good and bad service from particular firms.
4. A different approach to CMCs
Ms Ceeney spoke of some of the familiar criticisms of CMCs. Three quarters of PPI complaints to the FOS involve CMCs. The current Ombudsman News publication notes that FOS has “always stressed that consumers do not need help from a commercial third-party” and that it “aims to make it as easy as possible for people to use our service”.
While FOS acknowledges that it is up to the individual how to approach FOS, Ms Ceeney confirmed that FOS has a “shared view of some of the problems in relation to claims management companies“. She cited the use by CMCs of cold calling and inciting customers to complain with no good reasons. However, Ms Ceeney noted that many consumers need support and feel overwhelmed by firms’ complaints processes.
Ms Ceeney agrees that stronger regulation in this sector is required but called on firms to minimise the need for CMCs by preventing problems, pro-actively sorting out complaints and promoting the fact that customers can complain directly, for instance by making the process clear on their websites.
With FOS publicly recognising problems with CMCs, firms can now, as never before, vent their frustrations and press for effective regulation of their tormentors.