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Complaints about financial businesses – what might it mean to name and shame?
The Financial Ombudsman Service is consulting financial businesses, consumers and advisers on how best to publish FOS complaints data. This follows the Hunt review of the FOS published in April 2008. You can read more about the original Hunt review in ADR Update 23, details of its recommendations in ADR Update 24, and a summary of the FOS response in ADR Update 25.
The FOS has always published anonymised case studies, data on the types of complaint received, and the proportion of cases resolved in favour of the consumer. However, it has never publicly identified the banks, mortgage lenders and insurance companies which get the most complaints. The Hunt review came out strongly in favour of making this information public, in the interests of transparency and consumer choice. This consultation is about how best to make the mass of detail available in a way that helps consumers rather than confuses them.
Initial enquiries
During the year 2007-08, the FOS received 794,648 new enquiries, giving rise to 123,089 new cases. It would clearly be impossible to publish details of every single enquiry in a comprehensible format. The enquiries reflect a wide range of consumer concerns:
- Some are full-blown complaints which are ready to become new cases
- Some are complaints which have not yet been referred to the financial business concerned
- Some are seeking reassurance about something a financial business has said
- Some relate to issues that are outside the FOS remit
The FOS is considering how to publish some information about these initial enquiries, in order to highlight trends in consumer concerns, and also to identify businesses which are not handling consumer complaints well at this early stage.
Complaint details
How to record and publish data about the complaints that go on to become FOS cases is actually quite a complex issue. For example:
- How could the FOS distinguish between cases where the business has been really unfair to the consumer, and cases where its decision is reasonably fair but has not been clearly explained?
- Does it make a difference if the business has not offered enough compensation at the start, or if it has offered none at all?
- What about cases where there is simply a conflict of evidence that needs an independent third party to make a judgement call?
- Is it possible to identify cases where a business or a consumer has been unreasonable in pursuing the complaint, or is that too subjective a decision?
- Should consumers be able to tell the difference between cases where the business has done nothing wrong, and cases where it has done something wrong, but has offered adequate compensation – both are currently recorded as a decision in favour of the business.
- What effect might publishing this data have on the willingness of businesses and consumers to compromise at an early stage of the complaints process?
Which financial businesses?
In the six months from January to June 2008, the FOS received complaints about 2,361 different businesses. This does not give the whole picture, though. In fact, 93% of cases were about just 296 businesses, all of which had over 10 complaints each. And 31% of new cases related to just 4 businesses, each of which had over 2,000 complaints. Looking at these numbers, the FOS suggests that publishing complaints about 2,000 or more businesses with just one complaint would not be proportionate. It proposes publishing complaints about businesses that have more than 30 new complaints and 30 closed cases in a six month period. This is likely to involve around 150 businesses, with 85 – 90% of all complaints between them.
Other issues
There are some other questions such as how to link businesses which have different names but are part of the same financial group, or how to classify complaints against a business which has been taken over by another organisation. The FOS also welcomes comments on its proposed format for publication.
When?
The FOS is proposing to start publishing this data in either the first or second half of 2009.
Responses should be made to the FOS by 24 December 2008.
October 21st 2008
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