2.Main Content
2004 Financial Ombudsman
This page contains an outline of this research, and a summary of the key findings. Details of how to find the full report can be found at the bottom of the page.
Title
“Fair and reasonable: an assessment of the Financial Ombudsman Service”
What is it about?
The Financial Ombudsman Service (FOS) was formed in 2000 when five separate ombudsman schemes covering banking, insurance, investments and other financial services came together. Since then the number of disputes handled by the scheme has quadrupled, from around 25,000 a year to over 110,000 in 2004–05. Details of the FOS can be found on Financial Ombudsman Service.
The FOS has been under public scrutiny in 2004–05, as it has been held up as an example of good practice in dispute resolution on a number of occasions, in particular by the government in its White Paper proposals on reforming the tribunal system.
Who did it?
The evaluation was commissioned by the Board of the FOS and conducted by Elaine Kempson, Sharon Collard and Nick Moore of the Personal Finance Research Centre at the University of Bristol. The evaluation included observation of the FOS process, detailed audits of 72 closed cases and interviews with operational and senior staff. It was published in July 2004.
Key findings
- 47% of cases were resolved within three months, 79% within six months, and 91% within nine months.
- The average time taken to resolve case using guided mediation was four months.
- The average time taken to resolve cases that require investigation and a decision by an ombudsman was nine months.
- There has been comment and criticism of the fact that staff have financial incentives based on achieving a target number of cases. The researchers found no evidence that this had an adverse impact on the quality of the service.
- The unit cost per case was £473, which the researchers considered reasonable. (Unit cost represents the total costs of the FOS divided by the number of cases. Costs are paid by the financial firms, not consumers, through a combination of annual levy and a per-case fee of £360.)
- The overall quality of decision-making in the FOS is high.
- A great strength of the FOS is its high-calibre and well-trained staff.
- The researchers found no evidence to suggest that lack of consistency in decision-making was a significant problem in the FOS.
- The case-handling process is robust, fit-for-purpose, efficient and good value for money.
Overall levels of satisfaction with the service were high. For example:
- 90% of complainants felt they were kept well-informed.
- 75% felt their complaint was dealt with in a timely manner and the outcome was clear.
- 60% thought the decision was reasonable (less than 50% of complaints are upheld).
- 70% of financial firms complained about thought that the decision was reasonable.
- 90% of firms thought the FOS was a better alternative than going to court.
The researchers made the following recommendations:
- Delays are mainly caused by backlogs in allocating cases to adjudicators and ombudsman. More staff should be recruited to deal with this.
- Procedures for checking the quality and consistency of casework should be strengthened. (Note: The FOS has now made a senior member of the executive responsible for quality assurance across the organisation, following the author’s recommendation.)
Key websites
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