“An elephant in the room”!
The fallout from the Channel 4 Dispatches undercover Financial Ombudsman Service [FOS] report is still having far reaching implications which include; suggestions that 500,000 claims will need to be reassessed, calls for a judge-led public inquiry and a demand for answers by the Commons Treasury Committee.
On 13 March 2018, Rt Hon Nicky Morgan MP (Chair of the Treasury Committee) took the transparent step of putting in the public domain her letter to the Chief Ombudsman (Ms Caroline Wayman) requiring answers to many questions. Such openness is welcome, as is the decision to publish the reply (which is due by 27 March 2018). The questions are reasonable and also welcomed. However, there is an omission from the list of questions and “an elephant in the room”!
The missing question
Those claimants who have taken the advice of the FOS and some other groups who claim to have consumer’s interests at heart by suggesting that consumers do not need professional help to submit a claim; where do those who have been rejected by the FOS stand now?
Past criticisms of the FOS
Martin Lewis (and others) in a report titled “Sharper Teeth: The Consumer Need for Ombudsman Reform” dated November 2017 recommended, amongst other matters “Oversight of ombudsmen must be boosted”. Moneysavingexpert.com also called on the Government to overhaul the “farcical” ombudsman complaints system. Yet despite these concerns a number of television programmes and newspaper articles continue to ‘push’ listeners and readers to ‘do it themselves’ in particular when referring to PPI claims.
Despite the protestations by organisations such as the FOS, Caroline Wayman, ombudsman’s news October 2017, Martin Lewis, Moneysavingexpert.co.uk, Which? and others, the PFCA independent omnibus surveys by Populus consistently shows up to 74% of consumers want professional support to help with their claim.
It is time the elephant is discussed in parliamentary and regulatory circles
Whether a consumer chooses to use a financial claims management company [CMC] to manage their claim or whether they choose to handle it themselves is exactly that – the consumer’s choice. It should not be a matter for parliament, politicians or groups claiming to be on the side of the consumer to dictate that choice. In the same way that CMCs should treat customers fairly and do right by them by providing an honest and professional service, those who are labelled consumerists should not ‘over egg’ the ease of the direct route. Consumers using the direct route have lost out in the past. Product providers have used technical mechanisms to pay out less, for example; “comparative or alternative redress” – exposed by the PFCA and BBC File on 4. The PFCA analysed 70,755 redress offers over a 12 month period, consumers were worse off by an average of £728 when alternative redress was applied. Lloyds Banking Group was the largest user of comparative or alternative redress. Subsequently this practice has diminished.
Consumers have lost out again
If the Channel 4 Dispatches allegations are true, consumers who have adopted the FOS ‘consumerist’ suggestions and dealt with their own claim may have lost out again, they do not benefit from a third party providing oversight and checking an offer of compensation or a rejection. The estimate that 500,000 claims will need to be re-opened and reviewed appears an underestimate, but who will carry out this review and who will ‘police’ the ‘police’?
Martin Lewis – “Consumers need to have confidence”
If consumers do want to exercise their choice to manage a claim without third party help, they need to have the confidence to do so – that means they require a robust independent adjudicator system to support them. There must be an organisation that operates without fear or favour; an organisation that always does the right thing. As Martin Lewis said in an article in the Guardian on 29 October 2017 “Consumers need to have confidence that anybody bearing the ‘ombudsman’ brand will investigate impartially, and companies will have to abide by their decision.” It seems the Channel 4 Dispatches programme has called this requirement into question in the minds of many who are beginning to suggest that consumers have and are being let down with a resulting loss of confidence in the system, which is to the detriment of the consumer.
What now for consumers?
The Treasury Committee questions are a reasonable first step (the answers will hopefully be informative and helpful), the calls for a judge-led inquiry are not surprising and the requirement to re-open cases is a must do step, but what now for consumers? Consumer confidence needs to be rebuilt and it needs to be rebuilt quickly. Someone needs to turn the tanker around – quickly. Only then will consumers have confidence in the Service whether they exercise their personal right to manage a claim themselves or exercise their right to engage a third party to assist them.