How accessible is the Financial Ombudsman Service?

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1 The British Insurance Brokers Association (BIBA) is the UK s leading general insurance intermediary organisation. We represent the interests of 2,300 insurance brokers and intermediaries and have partner members from the leading companies in the insurance industry. BIBA members handle around half the value of all UK home, contents, motor, travel, commercial and industrial insurance policies and insurance intermediaries introduce 22 billion of premium income into London s insurance market every year. We are pleased to have the opportunity to respond to the call for evidence in the independent Hunt review of the Financial Ombudsman Service. BIBA is responding on behalf of its collective membership although we are aware that several of our members may be responding individually. In preparing our response we have taken into account the limited experience that our members will have had collectively of the FOS. General insurance intermediaries accounted for just 1.5 per cent of the new complaints submitted to the FOS in the financial year 2006/2007, compared with 30 per cent for banks and 11 per cent for general insurers during that same period. Many BIBA members will be among the eight out of ten businesses which come under the ombudsman scheme that will have had no complaints about them referred to the FOS during the financial year 2006/07. It is fair to say that while most of our members will have a good understanding of the purpose and processes of the FOS it will be only a very few of them that will have any kind of ongoing, everyday, working relationship with the ombudsman. BIBA recognises the benefits that flow from the role that the FOS plays in settling disputes between businesses providing financial services and their customers; not only from the individual s perspective, but also for boosting the perception of UK plc (and the financial services industry in particular) as a safe and fair marketplace for consumers. It is important that the FOS is accessible to all possible complainants, particularly vulnerable ones, and small businesses. It is right that the Hunt review is investigating how well the ombudsman is achieving those goals. We would argue that on the whole the FOS provides a good service to the industry, but has areas where its processes could be improved upon, for example information sharing about cases. We will explore these areas in our response, although we will not answer every question. Thank you for taking the time to consider our response. The BIBA Executive would be keen to meet with your team to discuss in more detail if required. Please contact Steve White, BIBA s Head of Compliance & Training, for further information on or whites@biba.org.uk.

2 Yours sincerely Eric Galbraith Chief Executive British Insurance Brokers Association How accessible is the Financial Ombudsman Service? Are there potential improvements to the FOS's working methods at initial contact and subsequently which would improve its accessibility and help to secure fair outcomes for both businesses and complainants? Can any additional costs be justified? (para ) A number of issues concerning FOS administration were raised during the consultation process with BIBA members, these were as follows: The considerable time it takes for the FOS to adjudicate on a case usually many months even for the fairly straightforward situations. This is unsatisfactory for both the customer and the firm involved. From a large member, concern that the FOS is increasingly becoming a point of first recourse for complainants instead of the last. The FOS states clearly that a firm should have the opportunity to respond to the complaint before the ombudsman becomes involved. The firm is question, however, has found that in practice the FOS involves itself in a complaint received direct before it has even been approached by the customer. Even the move to adjudication can be unclear, so that it can occur without the firm being given the opportunity of supplying a "final response" letter from its managing director. As mentioned, whilst the FOS web site states that the company should be given the chance to resolve a complaint before the FOS become involved, they also state that if the customer is unhappy about how a complaint is being handled they may be able to help - with no reference to the final response letter. In addition, the complaint reporting form on the FOS website while referring to a final response letter, does not make it clear that this should be obtained prior to FOS involvement. The FOS corresponds with the firm at several different addresses including local branches and even closed premises despite being informed of the firm s correspondence address. This delays the response and provides for the opportunity for letters to go astray. Are there any particular improvements which would assist potentially vulnerable groups? (para ) We have nothing to add on this particular question. How far is a material - or perceived - barrier to accessibility created by the eightweek period businesses are granted to resolve complaints before they can be considered by the FOS? (para )

3 From a business perspective we would not want to see the eight-week period for full investigation of a complaint reduced. Businesses need to have the opportunity to review/resolve a complaint in the first instance and to date our members have not come across any customer complaining that the eight week period acts as a barrier to accessing the FOS. Consumers, however, need to be made fully aware that firms are working within timescales set down by the statutory regulator for the financial services industry and not arbitrarily plucked out of the air by the firm involved to slow a complaint down. Can FOS information make the market work better? Should the FOS publish all or some adjudication and/or formal ombudsman decisions? What reasons are there for or against publication? What practical issues (e.g. selection criteria, anonymity, approach to summarising, regularity and form of publication) would arise and how should they be resolved? (para ) We believe that the FOS could publish more about the cases it has handled as these can be of enormous instructive benefit to the industry and help firms improve their complaints handling processes. In theory this information could result in fewer complaints being referred to the ombudsman. However, given the sheer size of the caseload that the FOS handles on an annual basis it would not be practical, cost-effective or even necessarily of interest to publish every single adjudication and/or formal ombudsman decision. It would be of benefit for the FOS to publish summaries of cases handled by adjudication and formal ombudsman decisions, however. This should include emerging trends as well as clear trends. Ideally summaries of trends by business sector would be most useful. The FOS might care to consider publishing in full cases that are deemed to be particularly instructive or ground-breaking. Care would need to be taken to ensure that the firms and consumers involved in the cases selected cannot be identified and that information was presented in a uniform manner, however. Full reports would also have to come with the caveat that the information has not been produced as definitive guidance on how to approach a particular complaint for a particular type of business, as the facts relating to all cases are individual. We would not want to see the FOS name and shame firms by publishing league tables with the number of complaints referred by consumers against the name of a particular firm. This type of information is not helpful and is open to misinterpretation. The Financial Services Authority has sufficient means of picking up firms with potentially problematic complaints handling processes through their RMAR reporting and through its regular discussions with the FOS. Putting more information out into the public arena would have obvious cost implications for the industry and any move to do so would need to be supported by a robust cost benefit analysis.

4 How effective do you find the FOS s publications; telephone helplines; website; and industry/consumer liaison arrangements in enabling you to understand and inform FOS policy and practice? How are these sources used within your organisation? (para 4.22) The Ombudsman News makes for interesting reading. We tend to circulate Ombudsman News among the executive at BIBA House and were there a particularly pertinent edition we would alert our members to the publication. A number of our members also commented on the usefulness of the publication (see quote below) as part of the consultation process, so its visibility is already high. Ombudsman News an outstanding publication that we read, digest and where appropriate we share with members in our quarterly newsletter, highlighting common complaints to make our [network] members think about the finer points of discussing exclusions/warranties with clients (e.g. medication increases re travel policies). The FOS annual review is also an excellent report providing a heads up on developing trends in complaints, and is well worth working taking the time to read through. Favourable comments have also been received from members about the FOS regional road shows which are aimed at different sectors of the financial services industry. One respondent went as far to call them: A perfect balance between broker and client outcome. BIBA has always found the FOS very helpful and feels that it has a good rapport with the ombudsman, even though we do not have a particularly structured working relationship with the organisation. BIBA is represented on the FOS liaison group along with the Association of British Insurers, which meets quarterly. The ombudsman has always responded to BIBA s requests to provide speakers for its conferences and sent representatives to talk to our technical committees if required. Do you use any other sources? What else would you value? We have nothing to add on this. Why has the IWI procedure been relatively little used? What additional changes are needed? We have no comment to make on this other than that while we agree that the IWI procedure should exist, we have always maintained that our members would generate insufficiently large numbers of the type of general insurance complaints to render this facility particularly useful to them.

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