The Financial Ombudsman Service (FOS) has recently published its latest six-monthly complaints data for the second half of 2017, and its plans for the year ahead (2018/19). Martin Ward, principal associate at Eversheds Sutherland, sets out the headlines
The FOS data features complaint numbers about banks, insurance companies and other financial businesses where at least 30 new cases were received and at least 30 cases were resolved in the six-month period from 1 July to 31 December 2017.
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Overall, the data provides a healthier picture for financial institutions, with the number of complaints in a downward trend:
- 219 businesses feature in the complaints data – down by 11% when compared to the first six months of 2017 (H1 2017);
- FOS received a total of 165,406 new complaints – a decrease of 3% when compared to H1 2017 (170,083);
Of this figure, 92,231 were about PPI – an increase of 3% when compared to H1 2017 (89,513); - Consumer credit complaints continued to increase – up 11% to 16,328 when compared to H1 2017 (14,752);
- IFAs reported 816 new complaints (a fall of 16%) and uphold rates in favour of the consumer were also lower, at 34% compared to 43% H1 2017;
- Banks retained their position at the top of the list for the most complaints related to investments. Banks were also the institutions with the most new complaints.
Plans for 2018/19
Following a formal consultation with its stakeholders, FOS has published its plans for the financial year 2018/19. In summary, FOS’s expectations for the year ahead include:
- Receiving 380,000 new complaints – including 220,000 complaints about PPI;
- Resolving 410,000 complaints – including 250,000 about PPI;
Freezing case fees at £550 for the sixth year, with no fee chargeable for each business’s first 25 complaints;
Freezing the levy at £24.5m; - The launch of an online portal so consumers and businesses can share information with FOS online and easily check in. A new internal case-handling system will also be launched helping to ensure that FOS can deal with complaints quickly, especially in light of the Payment Services Directive which since January 2018 allows consumers to ask FOS to step in to deal with a complaint 15 days after first complaining;
- A continued commitment to try and stop things going wrong in the first place – FOS will continue to share its insight and experience with stakeholders;
- Supporting the transition of claims management regulation to the FCA and arrangements for FOS to take responsibility for complaints about claims management companies (expected from April 2019), and
- Working with stakeholders on proposals by the FCA to give businesses larger than microenterprises access to FOS.
Horizon scanning
- In 2017/18, FOS received around the same number of complaints as they had projected in all areas other than PPI, packaged bank accounts and short-term lending. In relation to packaged bank accounts, 17% fewer complaints than forecast were received and over half as many again about short-term lending;
- Complaints in the future are expected to relate to the Insurance Distribution Directive, access to insurance, the revised Payment Services Directive (PSD2), Open Banking, the Immigration Act 2016, financial technology and the ongoing challenge of fraud and scams;
- Motor finance, overdrafts and debt are also expected to constitute potential causes of complaints;
- Projections for PPI complaints have been lowered by 30,000 as many consumers are expected to wait until closer to the August 2019 deadline before making a complaint;
- The proposed cap on fees, transfer of regulation to the FCA and PPI time limit might mean claims management companies look to ramp up and diversify their activity. It was also noted that claims management companies have taken a growing interest in short-term lending.
Conclusion
It has been a difficult few weeks for FOS following a recent Channel 4 Dispatches television programme in which it attracted criticism for the way it handled complaints. This has led to an imminent independent review of its business.
However, in this plan, FOS has made clear that it intends to prioritise delivering on the high expectation of its stakeholders and building confidence in what will be a challenging year ahead, with the FCA’s proposals to give more small and medium sized businesses access to FOS’s service.
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