The Financial Ombudsman Service has revealed how it will cut costs and work differently as the tidal wave of payment protection insurance complaints comes to an end.
David Cresswell, director of strategy at the Financial Ombudsman Service, said 10 years ago there was roughly 350 members of Financial Ombudsmen staff, including 20 ombudsmen, handling 20,000 cases.
Today there are 4,000 members of staff handling roughly 500,000 cases and 300 to 400 ombudsmen.
Even if you remove PPI from the ombudsman’s workload, Mr Cresswell said there had been about a 15 per cent increase in complaints volumes across other product areas excluding “blips” like mortgage endowments and split capital investment trusts.
But now the Financial Ombudsman Service is preparing to be leaner and deal with complaints more swiftly in a world where the deadline of 29 August 2019 has finally been set for payment protection insurance complaints to be made.
Mr Cresswell said: “That has been a key bit of why we have had to shift the way we work. We doubled two years running in size as we took on PPI."
He said while having a call centre as a "buffer zone" to queue queries worked well for PPI, it failed for other types of complaints, which is why the Fos is overhauling how it deals with incoming enquires.
“If it was PPI we then know exactly what five questions to ask next in order to be able to get to whether it is one of those complaints.
“We prided ourselves on the fact you could ring about anything from pet insurance to portfolio management and someone would know just enough to be able to ask the right questions and start you off down the right process.
“That was all very well at the front and hugely cost effective in that if you weren’t getting many questions that day about pet insurance that is fine as you were just taking inquiries about other things but all that then happened is you were just put into queues.
“[But] this is where embarrassingly we would have been talking sometimes about a year or two years wait for you get to the pet insurance ombudsman who then says ‘Actually this is just a really interesting question about contract law and we have a team of lawyers who would have looked at that. What a shame that wasn’t picked up right at the beginning and then it would have been dealt with then and a lot more cheaply.’"
A "substantial amount" of Fos' cost was queue and customer management, he said.
The new approach is designed to avoid this, but takes "a huge leap of faith", he admitted.
"Rather than ombudsmen being the most expensive thing so we put in a cupboard and they only get the most complicated cases or the ones that people have been waiting about for longest, we actually say do that two years earlier [now].
“In this new model ombudsmen are like this little family of five or six and then five investigators.
“The ombudsman is responsible, right at the frontline, for those five people and they are sticking together and taking calls that are coming in.”
Mr Cresswell said these investigators were adjudicators who have applied for this new role, which has a different definition of what they are required to do.
He said: “Rather than being about an old fashioned product knowledge this is far more about understanding concepts of law, duty of care and fairness as it applies across the law.”
Mr Cresswell said the investigator takes a complaint call first and figures things out but with instant access to an ombudsman for additional questions to deal with the issue swiftly.
He said investigators would also quickly contact an adviser to inform them they had been complained about to establish if there are grounds for the grievance.
If either side is unhappy with the process the responsibility of making a decision about the complaint will go to another ombudsman.
Mr Cresswell said: “Every ombudsman has their home areas but 80 per cent of what they will do will be about related areas coming out of that.”
Liz Field, chief executive of the Personal Investment Management & Financial Advice Association, said: "This is very good news as this is an area that most adds to costs for all our member firms."
Keith Richards, chief executive of the Personal Finance Society, said: "There is no surprise for anyone that Fos will be reducing their staff count now that PPI mis-selling claims are coming to an end."
Mr Cresswell spoke to FTAdviser about changes at the organisation after a Financial Ombudsman Service staff survey revealed many feel let down by senior bosses, who they claim fail to give a sense of direction or listen to feedback.
Just 19 per cent of staff polled believe senior management at the Financial Ombudsman Service provide a clear sense of direction and only 21 per cent think their top bosses are open to feedback, the staff survey seen by FTAdviser revealed.
When asked to comment on the findings of the survey, a spokesman for the ombudsman said the organisation had been through a lot of change over the last few years and “clearly there are areas where we can improve and we’ll be working on this.”
The poll of 2,259 members of ombudsman staff, conducted between 23 May and 16 June, also showed less than one in five (18 per cent) are confident senior management are making decisions which will benefit the service in the long run.
The survey, which was completed by 78 per cent of the ombudsman’s staff, also showed workloads vary considerably across the service.
Almost half (49 per cent) of ombudsman service staff feel they have too much work to do, while 36 per cent feel they have about the right amount to tackle during their working day.
A total of 14 per cent of those polled feel they have too little work to do.
Two out of five ombudsman employees feel stressed or worried about work often or all of the time.
emma.hughes@ft.com