The Financial Ombudsman Service (FOS) has issued a consultation paper to change the way it publishes data relating to firm-specific complaints.
It wants to stop reporting complaints which will increase a firm’s uphold rate, if they are settled by the companies before the ombudsman investigates.
The service said that the change will only be temporary and it will help speed up the resolution of backed-up claims.
In its plans for 2020-21, the Ombudsman anticipated to receive around 145,000 non-PPI complaints, but it actually ended up with 237,000, more than 60% increase from its forecast.
This means that, while it managed to close 99% of the volume on such claims, “this increase in demand left us with more outstanding cases than we expected”, the FOS said.
“We began this financial year with around 90,000 complaints waiting to be investigated.”
Additionally, while the FOS is “on track to exceed the complaint resolution target” for this year, it is very likely to end 2021-22 with a “significant queue”.
As a result, the ombudsman is actively exploring a range of initiatives to speed up the complaint process.
- Engaging with businesses to move complaints along more quickly;
- Freeing up investigators’ time by routing calls to different teams; and,
- Focusing triage in some areas, such as fraud and scams.
Among the initiatives there is also the proposal to temporarily change the way it reports the outcome of firm-specific complaints.
The FOS said: “The way the uphold rate is calculated is straightforward. Complaints are recorded as having had a ‘change in outcome’ if the complaint is resolved by the Financial Ombudsman Service with a more favourable outcome for the customer.
“Complaints are recorded as having had ‘no change in outcome’ if we resolve the complaint having found the business to have done nothing wrong, or if we agree that any outcome proposed by the business prior to our involvement was fair.
“The ‘uphold rate’ reflects the percentage of complaints resolved as a ‘change in outcome’. We publish this data as it increases transparency, helps to inform consumer choice, and provides an incentive to businesses to improve their complaint handling.”
For a short time
The operational change would see the ombudsman create a “separate category” to record any complaint that is proactively settled by a firm before the FOS issues its opinion.
Such complaints would not be recorded as having either a ‘change in outcome’ or ‘no change in outcome’ and they would not contribute towards a firm’s uphold rate.
If this was to happen, it would only be limited to a specific period of time – up until the end of the financial year on 31 March 2022.
After that date, the recording of outcomes would go back to the current framework.
The move is targeted as reducing queues “that have been made worse by the covid-19 pandemic”, the FOS said. “Although the pandemic is still ongoing, feedback from financial businesses suggests that most have now adapted to the operational challenges it presented, and our new complaint volumes have fallen significantly since the height of the pandemic and have stabilised at lower levels for several months.”
The ombudsman hopes that such a move would incentivise financial services firms to settle complaints proactively at an earlier stage as this would both bring closure to their clients and reduce the operational strain for businesses and the ombudsman.
The consultation will be open until Monday 18 October 2021, and the FOS plans to publish its decision and associated plans by 1 November 2021.