Redress, politics and proposals

Now that the government and the opposition parties have set out their policies on financial reform, we know what each would do with the financial regulatory system. But so far as the ombudsman service is concerned, the news seems to be 'no change' – with no one proposing to tamper with our role.

The Conservatives say that the ombudsman service plays an important role in consumer protection, as it provides a means of resolving consumer disputes. They see the ombudsman working closely with their proposed Consumer Protection Agency – which would take over the consumer functions of the Financial Services Authority (FSA) and the consumer-credit responsibilities of the Office of Fair Trading (OFT). The Lib-Dems have made it clear they have no interest in institutional reform – so presumably that means no change for us.

But it’s the government’s proposals for ‘collective redress’ that present the most interest for those of us concerned with complaints and redress in areas where there has been widespread consumer detriment in recent years.

The government's proposals say:

Where many consumers are affected in a similar way, there should be routes to collective redress that can deal with claims more efficiently, reduce the time that claimants may have to wait, and reduce the volume of individual cases dealt with by the courts or the Financial Ombudsman Service.

This would mean enhanced powers for the FSA and a right of collective action in the courts. These proposals echo thoughts I outlined in our most recent annual review.

So I’m looking forward to a busy and interesting final few months as chief ombudsman – watching some of these proposals take shape before I step down at the end of October.

Walter Merricks
chief ombudsman

chief ombudsman to step down after ten years

30 June 2009

Walter Merricks, chief ombudsman at the Financial Ombudsman Service, announced today that he would be stepping down – after ten years in the post which have seen him set up and run what has grown to become the world's largest ombudsman scheme.

Under his tenure as chief ombudsman, the Financial Ombudsman Service has handled over five million consumer enquiries and resolved 750,000 disputes between consumers and financial businesses. Last year it dealt with a record 127,471 complaints, with an average staff complement of 865.

Announcing his plans to step down as chief ombudsman, Walter Merricks said:

It has been a privilege to lead this organisation and its excellent people – but it is now time for me to move on.

A strong independent service providing justice in the field of consumer financial disputes is needed now more than ever. The ombudsman service has found a permanent place in the consumer-protection framework for financial services, and I am confident that the organisation will continue to be valued by financial firms and by consumers alike.

Our service is not just for consumers who find themselves in dispute. Research continues to show that more than half of UK consumers say the existence of the ombudsman gives them confidence in financial services.

Walter Merricks plans to leave the ombudsman service in the autumn, to become the first chair of the Office of the Health Professions Adjudicator (OHPA) – the new statutory organisation being set up, under the Health and Social Care Act 2008, as the single independent body to adjudicate in respect of cases of "fitness to practice" referred to it by the regulators of healthcare professionals.

The non executive board of the Financial Ombudsman Service, led by chairman Sir Christopher Kelly, will shortly begin recruiting for Walter Merricks' successor as chief ombudsman, including advertising the post publicly.

ombudsman service publishes annual review of personal finance disputes

The Financial Ombudsman Service – the independent organisation that settles disputes between consumers and financial companies – today publishes its annual review for the 2008/09 financial year. The review shows that during the year, the ombudsman:

• Handled 789,877 consumer enquiries and a record 127,471 new complaints.
• Resolved 113,949 disputes – a 14% annual increase – with our involvement resulting in compensation for consumers in 57% of cases.
• Saw the number of complaints about mortgages, credit cards and consumer credit rise by 34%, and insurance disputes increase by 84% – while complaints about mortgage endowments fell by more than half.

While half of the total number of disputes related to six of the UK's largest financial services groups – broadly in proportion to the amount of business they carry out with consumers – more than 95% of businesses covered by the ombudsman service had no complaint referred to the service during the year.

Sir Christopher Kelly, chairman of the ombudsman service, said:

The financial world is a very different place now from a year ago – and the ombudsman, like everyone else, has been affected by the economic turmoil. For us it has involved dealing with a significant increase in the number of complaints arising from the impact of the worsening financial climate.

As businesses tighten their belts – and the credit crunch leads to increased financial difficulty for many consumers – we are gearing up to deal with further volatility in complaint volumes.

Statistics from the annual review show:

• A three-fold increase in complaints about payment protection insurance (PPI) – following a five-fold increase in the previous year.
• Complaints about motor, household and travel insurance rising – but complaints about health insurance levelling off.
• Complaints about investment bonds more than doubling – but pension complaints falling by 9%.
• 26% of cases referred on behalf of consumers by commercial claims-management companies (a 40% increase on the previous year).
• The proportion of complaints from "blue-collar" workers ("C1/C2") increasing by 17% – with complaints from people from professional backgrounds ("white-collar") falling by 18% in the last two years.
• 74% of adults said they had heard of the Financial Ombudsman Service – with awareness of the ombudsman highest in the North and South East and lowest in Northern Ireland.
• The average cost of resolving a dispute at the ombudsman service has fallen 4% year-on-year to £508.

annual review 2008/09 [PDF opens in new window]