financial year 2015| 2016 annual review of consumer complaints about ... INSURANCE • CREDIT • BANKING • SAVINGS • INVESTMENTS 2 annual review 2015/2016 Financial Ombudsman Service about the financial ombudsman ●● We were set up under ●● Our service is free to the Financial Services consumers. and Markets Act 2000 to resolve individual disputes ●● Consumers don’t have to between consumers and accept any decision we financial businesses – fairly, make. But if they accept an reasonably, quickly and ombudsman’s decision, it’s informally. binding both on them and the business. ●● We handle complaints about all kinds of money matters ●● We don’t write the rules – from insurance and for financial businesses mortgages to savings and – or fine them if rules are payday loans. broken. That’s the job of the regulator. ●● If a financial business isn’t able to resolve a customer ●● Everyone can learn complaint, we can step in to something from complaints settle the dispute. But the – so that what’s gone wrong business should have the in the past needn’t happen chance to sort things out again. This is why we have a itself first. crucial role in sharing what we see – to help prevent ●● We’re independent and future problems. impartial. When we decide a complaint, we look carefully at both sides of the story and weigh up all the facts. ●● If we decide the business has treated its customer fairly, we’ll explain why. But if we decide the business has acted wrongly, we can order it to put matters right. 2 annual review 2015/2016 Financial Ombudsman Service Financial Ombudsman Service annual review 2015/2016 1 contents 4 chairman’s foreword 8 chief ombudsman’s report 17 sorting things early on 29 investigation 43 the types of problems we’ve seen 73 who complained to us 97 who the complaints were about 107 our insight and outreach 119 our news and updates 129 our board and senior people 136 index 140 our services for businesses and consumer-advice agencies 2 annual review 2015/2016 Financial Ombudsman Service contents our year at a glance ●● We answered 1,631,955 ●● More than half of the total enquiries from consumers number of complaints we – over 5,000 each dealt with involved four working day. banking groups – while 4,076 financial businesses ●● We took on one in five of accounted for just 3% of these enquiries for a more complaints. detailed investigation – a total of 340,899 new ●● The proportion of complaints. people from an unskilled background (the DE socio- ●● We resolved 438,802 economic group) who used complaints – almost our service rose by just 100,000 more than we under half. received. ●● Overall awareness of the ●● 75% of people whose ombudsman continued to complaints we resolved rise – with nearly nine in rated us positively. And of ten people having some those who felt they hadn’t awareness of our service. got the outcome they’d hoped for, 57% still gave ●● We operated on a cost base us positive feedback – of £257.9 million with 3,676 a rise of 16% on last year. employees at the end of the year. ●● 56% of new complaints were about the sale ●● More than nine in ten of the of payment protection businesses and consumer insurance (PPI) – 188,712 advisers who met us face to complaints overall. face agreed they got clear, useful answers to take back ●● Excluding PPI, we resolved to their organisation. two thirds of complaints within three months. ●● Complaints about packaged bank accounts more than doubled – while complaints All figures relate to the about credit broking fell by financial year 2015/2016 more than half. 2 annual review 2015/2016 Financial Ombudsman Service Financial Ombudsman Service annual review 2015/2016 3 chairman’s foreword This review gives us the opportunity to reflect both on our achievements over the year and on our purpose. The achievements are a tribute to the commitment and professionalism of our people for which I am hugely thankful. The figures show a year of substantial progress in settling complaints, in focusing on customer satisfaction both for consumers and businesses, and in making inroads into the volumes of cases with which the fall-out of payment protection insurance inevitably left us. Sir Nicholas Montagu KCB 4 annual review 2015/2016 Financial Ombudsman Service Financial Ombudsman Service annual review 2015/2016 5 chairman’s foreword But, important though it is that we have resolved 100,000 more complaints than we have received this year, this is only part of the picture. It may be a truism that behind every case lies a human story, but it is one which we forget at our peril. In a perfect world nothing would go wrong – and there would be no need for complaints handling at all. But that world does not exist – and probably never will – which brings us back to our purpose. It would be possible for us to judge complaints on the basis of what is fair and leave it at that. That could be efficiency of a sort, but not of a sort that we would ever espouse. A complaint being escalated to us means that earlier attempts at agreement have failed; it also suggests that there may be upset and frustration on one or both sides. Our involvement should aim to dispel those emotions. That is why we set such store by our answers not only being fair, but feeling so. Our initial conversation with consumers enables us to probe their concerns and manage their expectations. Similarly, our contact with financial providers gives them assurance that we are not burdening them with unnecessary process, and that our approach is transparent, consistent, professional and sensitive to where they are coming from. chairman’s foreword chairman’s 4 annual review 2015/2016 Financial Ombudsman Service Financial Ombudsman Service annual review 2015/2016 5 chairman’s foreword So we need to get away from the idea are always a good indicator of how of “cases” – suggestive of stacks of we are doing. Talking to some of paperwork and a prolonged process our teams who are using these new – and think more about what causes ways of working, I was delighted disputes and how we can stop them to discover that among consumers from happening in the first place. whose complaints we have not If we can enable consumers and upheld, a significant majority are financial providers to identify and satisfied nevertheless, feeling that focus on the real underlying concerns, they have been listened to and that and get them resolved quickly and they have received a clear explanation informally, everyone wins. This is as to how things stand. So often, why we have continued to streamline this satisfaction is just a question of our own internal processes this year; our being able to step in as early as and I have been encouraged by and possible – to talk people through the grateful for the readiness of financial reasons and the complexities behind providers to work with us in helping their problem. to do this. Of course some complaints may still Results are encouraging. The involve reams of paper going back satisfaction rates among consumers years. But the main thing is that whose complaints we don’t uphold we are more flexible, gearing our 6 annual review 2015/2016 Financial Ombudsman Service Financial Ombudsman Service annual review 2015/2016 7 chairman’s foreword approach to the fairest and quickest As ever, I should record my gratitude result. There are lots of issues to be to my Board for their unfailing decided along the way, but I believe wisdom and support. Gwyn Burr left that we have a genuinely stronger us during the year, and I thank her for partnership with financial providers her insights and the customer focus than ever before, with the shared she brought – we were extremely aspiration of fairer, quicker outcomes lucky to secure Gill Whitehead as her for their customers. successor. I have also been encouraged by the We might legitimately rest on some strength of our relationship with of the laurels highlighted in this the Financial Conduct Authority review of the year – but that is not (FCA). While respecting our different something we would do. Instead we responsibilities and boundaries, look forward to the coming year with we have continued to work together the usual mixture of apprehension constructively to address our common and enthusiasm. The commitment, concerns, to the advantage of all energy and optimism of our people our customers. mean that enthusiasm will get the upper hand. Nick Montagu May 2016 chairman’s foreword chairman’s 6 annual review 2015/2016 Financial Ombudsman Service Financial Ombudsman Service annual review 2015/2016 7 chief ombudsman’s report In March 2016 we received our one-and-a-half millionth complaint about payment protection insurance (PPI) – accounting for half of all the complaints we’ve received since we were set up. These volumes of complaints – and the rate at which they’re still arriving each week – reflect the scale of the challenge that remains, two years after the peak of PPI, of fully restoring trust in financial services. I’m encouraged that the recent Financial Advice Market Review, carried out by HM Treasury and the Financial Conduct Authority (FCA), is supportive of our role in resolving complaints, as well as the wider work we do. And I’m confident that this annual review of 2015/2016 shows we’ve largely met the challenges we set ourselves at the beginning of the year – helping people move on from past unfairness, while building a service that’s fit for the future.