The Financial Ombudsman Service (FOS) is to carry out an internal review following an exposé on Channel 4’s “Dispatches” programme, chief executive Caroline Wayman has said.
Replying to a letter from Treasury Committee chair Nicky Morgan, Wayman said the FOS will appoint an independent party to “better understand and address the concerns raised” by Dispatches’ undercover investigation.
She said: “Every day our ombudsmen and casehandlers make difficult judgement calls that affect people’s lives – so it is vital that everyone has confidence and trust in the work we do.
“We feel very strongly that the concerns voiced in the programme do not give a fair impression of the Financial Ombudsman Service when seen against the overall breadth and context of our work.”
In the Dispatches investigation, first aired on March 5, a number of ombudsmen admitted to having judged in favour of businesses so that they could close files quicker – particularly following the huge inflow of complaints over payment protection insurance (PPI) in recent years.
Undercover footage also showed executives expressing bias against complainant consumers, and admitting to how the fear of setting precedents played a role in adjudicating against complaints.
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Wayman said: “We do, of course, have a well-established quality assurance framework – from undertaking several thousand checks on cases every month to detailed file review sessions with our executive team and non-executive board. More broadly, our case-handling process itself provides for a series of checks and balances.”
She said that ombudsmen’s decisions did not create a precedent in a formal, legal sense, but the Financial Conduct Authority did require businesses to take FOS outcomes into account in their complaint handling.
On alleged pressure to close cases as quick as possible, which reportedly made ombudsmen more likely to adjudicate in favour of businesses, Wayman said: “Uphold rates are often cited as a proxy for bias, but the picture is, of course, more complex. Depending on the nature of the product, the business involved and when and how things happened, our published uphold rates range from around 10% to 90%.
“They also reflect the quality of complaint handling by businesses and claims management companies … Since 2010, when we started to see significant volumes of PPI complaints, we have found against banks in around two thirds of cases.”
She revealed that the FOS had received at times up to 14,000 new PPI cases a week.
“This unprecedented volume has understandably caused significant pressures,” she said. “This meant that there have been times when consumers have waited longer than we would have wanted for answers to their complaints. But the length of time that people have had to wait for answers has been coming down.
She added: “We undertake routine checks to make sure all cases are progressing as expected. Where we find any discrepancies we make contact with a customer to explain what has happened and ensure their complaint is put back on track.
“So we just don’t recognise these specific claims. But as with all the issues arising from the programme, we will ask for the independent review to clarify the precise concerns raised and for it to consider them.”