Greater transparency is needed

Consumers have a right to know which firms will treat them fairly in the case of a dispute and which will attempt to fob them off.

That is something I have always passionately believed. And it is why I have always argued for greater transparency from both the FSA and the Financial Ombudsman Service.

Slowly but surely we are moving in the right direction despite opposition from the industry.

We already have complaints figures being published and now we are moving closer towards naming firms involved in adjudications made by the financial ombudsman.

Some in the industry are not happy, they fear reputational damage. And so they should.

If a firm has acted against the interests of one of its customers and been given every chance to put things right, then its name and behaviour should be made public.

If reputational damage is the result, then it only has its own belligerence to blame.

In the case of large businesses, publishing their names in ombudsman decisions can only increase their awareness of how important it is to take customer service seriously.

But what of small firms? In responses published last week to the ombudsman’s plans, some feared they could suffer disproportionately because their reputations could suffer locally.

Much as I have sympathy for this argument – and the ombudsman did too – the case is basically the same as for big business.

A case only goes to the ombudsman for a final decision if one party refuses to accept the decision of an adjudicator or if the case is particularly complex.

So this increases the onus on the firm to be absolutely sure that they are right and the client is wrong. And not just in strictly legal terms.

The ombudsman bases decisions on the balance of probabilities, what is right in fairness terms and what a consumer can be expected to understand.

You might want to have a word with your insurers too for, in the case of small businesses, it can be they who decide to fight based on strict legal issues rather than on fairness.

Intriguingly, some businesses thought they should be allowed to edit decisions themselves for commercially sensitive information. You can see where that would end. Not surprisingly the ombudsman has dismissed that idea.

So we appear to be reaching a consensus where business names will be published but employees will for the most part be anonymous. Consumers will quite rightly also be anonymous.

But while commercially sensitive information may be withheld at the discretion of the ombudsman, businesses will not be able to hide embarrassing facts.

So we will get more transparency, consumers will be better informed and businesses that treat their customers fairly will benefit.