dealing with complaints at the early stages

The Financial Ombudsman Service handles consumers’ complaints that financial firms have not been able to resolve themselves. Our general message to consumers is that they should always take their complaint to the firm first – this resolves many complaints without any need for our direct involvement.

* Complaints prior to April 2000 were handled by the separate complaints-handling schemes, before they came together as the single ombudsman service. The former separate schemes used different methods of recording statistics, so these figures are necessarily estimated.

The message appears to be getting across. The number of initial enquiries we have received from consumers has fallen slightly this year as – increasingly – consumers are giving firms the chance to put things right before approaching the ombudsman. In the past, a significant number of enquiries went to the ‘wrong’ complaints-handling scheme – as consumers phoned or wrote around, trying to find where they should go with their dispute. This problem has been eliminated now that we are a single ombudsman service, covering complaints previously dealt with by eight separate schemes.

An increasing number of consumers are also seeking the information they want directly from our website, rather than phoning or writing to us. We are now getting over 25,000 online visits a month.

Where consumers contact the ombudsman service before raising their complaint directly with the firm, our customer contact division forwards the complaint to the firm and asks it to investigate the matter under its formal complaints procedure. We remind consumers that, if the firm is unable to resolve their complaint within eight weeks, then they can ask us to get involved directly.

Our customer contact division provides a ‘single point of entry’ for all consumer enquiries – referring new complaints to firms where appropriate and giving general advice and guidance. It also gets involved at the initial stages of the ombudsman process, actively looking for opportunities to resolve simpler complaints (for example, those which have arisen through misunderstandings or administrative errors – where matters can be put right quickly, sometimes with just a few phone calls).

For complaints where further dispute-resolution work is needed – through conciliation, or investigation and adjudication – our customer contact division acts as the gateway to our specialist case-handling teams.

complaints referred on to our case-handling teams

In the year ended 31 March 2002, our customer contact division referred 43,330 new cases to our case-handling teams for more detailed dispute-resolution work – a 38% increase on the previous year (and 14% more cases than we had estimated in our budget).

* separate figures for these categories of complaint were not shown in earlier annual reports published by the former ombudsman schemes.

The chapter overview of complaints trends gives more details and background information about the main types of new cases we received during the year.

Given the very wide-ranging nature of complaints we handle – from pet insurance to spread-betting – we have not included individual case studies in this annual review. The limited space in this document means we are unable to give a fair and representative overview of all aspects of our work.

However, we include case studies in our regular publication, ombudsman news, which provides feedback on recent complaints trends, as well as commentary and briefing on our approach to different types of complaint. We hope that firms find ombudsman news a helpful source of reference – and that they will take its contents into account when considering how to handle complaints. To join the ombudsman news mailing list, please contact our communications team (phone 020 7964 0092).

outcome of cases

During the year we have put an increasing focus on using mediation and conciliation to resolve as many complaints as possible at the earlier stages. This can be quicker and more efficient than a formal investigation which can sometimes be quite a drawn-out process.

Where mediation is not appropriate, or does not resolve the matter satisfactorily, we usually begin a full investigation, carried out by one of our case-handlers. But even at this stage, conciliation may still be possible – especially if previously unknown facts emerge.

Otherwise, the case-handler involved will usually issue an adjudication, setting out our recommendations about whether the complaint should be upheld. In most cases, both sides accept these recommendations. But either side can instead ask for a review and final decision by an ombudsman.

* Complaints for the year ended 31 March 2001 were resolved using the rules of the former complaints-handling schemes – before the new ombudsman rules came into force under the Financial Services and Markets Act 2000. The former schemes had different powers and procedures – as well as separate methods for recording the outcome of complaints. For these reasons, we have been unable to produce a single set of figures that is statistically comparable to the figures we now record to show the outcome of cases.

our budget and productivity

	number of cases resolved and closed 2000 = 21,100 2001 = 28,400 2002 = 39,194
	average number of cases resolved per week by each case-handler 2000 = 3.1 2001 = 3.3 2002 = 3.75
	our unit cost* * Our unit cost is calculated by dividing our total costs (before financing charges) by the number of cases we close. Total costs include the budgeted figure for depreciation, so as to remove any distortion arising from our depreciation policy. 2000 = £730 2001 = £753 2002 = £684

Our total costs for the year ended 31 March 2002 were £27.2 million, compared with a budget of £27.6 million. Our income for the year ended 31 March 2002 of £27.5 million was close to the budget. The surplus for the year of £0.3 million was transferred to reserves. The detailed financial statements are set out on pages 30 to 51 of this review.

who brings complaints to the ombudsman?

The ‘average’ customer of the ombudsman service is between 35 and 54 years old. This is perhaps not surprising, given that demographically this age group is likely to have wider levels of ownership of financial and investment products.

We are carrying out further research to see how ownership of financial products across the UK population as a whole compares with the patterns we see, in relation to people who bring complaints to the ombudsman service.

how old are people who complain to the ombudsman?

where do people who complain to the ombudsman live? Northern Ireland = 2% South East = 21% Greater London = 12% South East = 11% North West = 10% West Midlands = 9% Yorkshire Humber = 9% Scotland = 7% East Midlands = 6% North East = 5% Wales = 4% East Anglia = 4%

The geographical location of the people who use our service broadly reflects the overall population spread across the UK as a whole. Our research shows a variance of more than one or two percentage points in three regions only. People from East Anglia comprise 9% of the population but 4% of our customers. Conversely, people from the South West comprise 8% of the population but 11% of our customers. 21% of people who used our service came from the South East (home to 14% of the UK population). This appears to reflect the fact that there are proportionately higher levels of ownership of financial and investment products in the South East.

what gender are people who complain to the the ombudsman? A significant proportion of complaints we receive relate to policies and accounts held jointly. With joint accounts, the first-named is frequently male – and it is the first name that our system records. This may result in some bias in the data we record about the gender of people who complain to us. female = 33% male = 67%