Putting Consumers First

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Ethical and Professional Standards

Demonising Customers does not help

FOS to take on 1000 more staff to deal with PPI Claims

The Daily Telegraph recently quoted Natalie Ceeney, Head of the Financial Ombudsman Service (FOS), as criticising banks for “demonising customers”. Her thoughts will not surprise those who have been involved in helping consumers with their financial claims. Those working on claims will be only too aware of the hurdles that are put in the way of proving or delaying genuine claims. We must not forget that FOS is meant to be an organisation of last resort; an organisation that looks at complaints that the parties cannot settle between themselves, yet the ombudsman service will be hiring a further 1,000 staff in the next six months just to help deal with Payment Protection Insurance (PPI) claims. One has to ask why do so many claims end up being referred to FOS? An independent onlooker would be surprised that so many claims can’t be resolved between the parties without the need for third party determination.

The numbers of claims that have to be referred to FOS is outrageous!

It seems staggering that FOS has handled over 2 million initial enquiries and complaints from consumers a year (over 7,000 each working day) and that around one in four of the initial consumer enquiries they received turn into a formal dispute. Let’s be in no doubt, this suggests that financial institutions are rejecting over 2 million claims a year – why else would the arbitration service provided by FOS be needed! While, clearly, there will be some cases where there is a genuine dispute which requires the services of a third party to resolve, something seems to be fundamentally wrong when so many disputes are referred to a third party.

Where does the criticism lie for such high levels of referrals

The key issue is, are customers bringing vexatious claims and, therefore, deserve to be demonised or are financial institutions failing to settle valid claims and deserve the label themselves? The answer lies in FOS uphold rates. The percentage of cases upheld in favour of the customer varies across the range of financial products. However, focusing on the product that is currently generating the bulk of the FOS workload (PPI), the FOS website shows that 65% of all cases are upheld in favour of the customer. The FOS site also states, in respect of PPI, “some financial businesses are still not following the well-established approach to handling complaints and putting things right.”

Let’s be clear, where FOS uphold in favour of the customer they have found either:

  • The financial business told the consumer in its final response that it had done nothing wrong – but after the complaint was referred to FOS, they decided (or the business belatedly accepted) that it had done something wrong after all.


  • The financial business’s final response offered the consumer inadequate compensation – but after the complaint was referred to FOS, FOS required the business (or it belatedly agreed) to increase its offer to an appropriate level.

Who should be demonised?

While so many claims, which were rejected by financial institutions, are upheld in favour of the customer by FOS, it seems clear to me that if any party is to be demonised it should not be consumers!

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