Surge in complaints keeps Financial Ombudsman busy

This week, the Financial Ombudsman published its Annual Review. Suitcase
The Review, available on the Ombudsman’s website, outlines the nature
and number of complaints the Ombudsman receives relating to financial services.

What is the Financial Ombudsman Service?

The Service was set up by Parliament to sort out complaints between financial services firms and their customers. It was established in 2000, and given statutory powers in 2001 by the Financial Services and Markets Act 2000.

Despite the last 12 months being described as ‘a really challenging year’ by Caroline Wayman, chief ombudsman and chief executive – and being the service’s busiest for five years – Wayman believes that satisfaction with and public trust in the service has remained high.

Latest annual review - key headlines

The FOS publishes a review annually, detailing the number and type of complaints it has received.

The 2018/2019 review shows that:

  • During the year, the FOS dealt with its 2 millionth complaint
  • It received more than 388,000 new complaints in 2018/19 – up 14% on the previous year
  • It dealt with almost 1.7 million phone calls, letters and emails
  • Complaints about consumer credit products and services grew by 89% during the year
  • PPI continued to deliver the highest number of complaints, accounting for 39% of the total
  • 21% of complaints about PPI and 38% of those about other issues were upheld

The rise in complaints to the FOS is in interesting contrast to the FCA’s latest figures, released last month, which showed that complaints to the regulator in the second half of 2018 were at their lowest level for three years.

Singling out areas for improvement

Describing this year’s workload, Caroline Wayman said that it demonstrated ‘unacceptable’ elements of the financial services sector, where ‘in too many cases, customers have been left to struggle with unsustainable debt’.

In the case of short-term lending, around six in ten complaints were upheld. The FCA published the findings of its review into the debt management industry in March – something we covered in a recent blog, and set out its plans for improving the sector.

Insurers are also mentioned in the review – Wayman says that ‘we’ve also raised concerns about potential vulnerability and harm in other areas – for example, warning insurers about penalising customer loyalty, and challenging banks to deliver fairer outcomes for victims of fraud’.

Again, the FCA’s activity reflects the Ombudsman’s concerns here. The regulator has warned insurers in the past about the need to be fair in their renewals communications and in its 2019-20 Business Plan, cited financial crime, like fraud and scams, as one of its priorities.

How can you avoid complaints?

If you want to ensure your firm doesn’t provide work for the Ombudsman in the next twelve months, there are some basic steps that can help.

Meeting the FCA’s financial promotion rules doesn’t, of course, guarantee that you won’t have any dissatisfied customers. But if you follow the regulator’s guidance, there is a much better chance that your marketing and customer communications will be fair, clear and not misleading – a big step towards customer satisfaction.

  1. Make sure your promises are fair and your services and solutions deliver on what you offer. Your financial promotions need to comply with the requirements – and not just the FCA’s. All adverts need to comply with the rules set by the ASA and CAP, who regulate all UK advertising.
  2. Your advice and sales processes need to meet regulatory requirements. Misleading ads are particularly in the spotlight currently following a high-profile firm collapse – make sure yours measure up.
  3. Be alive to rules around disclosures and their prominence. Small print is in the headlines at the moment too, with a new government campaign focused on terms and conditions.
  4. Remember that compliance isn’t confined to printed publications. There are risks inherent in your social media strategy; make sure you’re aware of them to ensure a compliant approach to Twitter, Linkedin and any other social media platforms you use.
  5. Regulations are ever-changing. Keep on top of what’s coming down the line: our blog summarises the 8 things Compliance teams need to focus on this year.
  6. Explore whether you can use innovation and regulatory technology to improve your regulatory compliance.
  7. Make sure your client service matches up to your promises – read tips on how you can convert client care promises into action.

Treat your customers fairly to minimise the risk of complaints

Treat your customers fairly – from compliant financial promotions to services that deliver what they promise – and you will have a better chance of avoiding consumer complaints. If you want a refresher on the FCA’s Treating Customer Fairly rules, and what financial services companies need to do to live up to them, you can download a copy of our TCF FAQs. The FAQs are free, and you can get your copy from our resource library.

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Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.