Thousands of cases could be re-opened at the Financial Ombudsman Service (Fos) following allegations its staff were insufficiently trained and making off the cuff decisions.
The Personal Investment Management and Financial Advice Association (Pimfa) called for an immediate independent review of past cases at the ombudsman after an investigation by Channel 4’s Dispatches programme alleged some decisions may have not been fair to consumers.
Liz Field, CEO of Pimfa, said: “It is imperative that individuals feel confident they can seek redress if something has gone awry to avoid severe detriment to individuals lives.
“We therefore support the call for a review of past cases that remain questionable in a bid to prove that cases have been dealt with correctly.”
The Fos has been inundated with claims in recent years, handling more than 300,000 new claims a year - payment protection insurance alone has produced 1.4 million claims since 2010.
Dispatches heard investigators the ombudsman had been churning out decisions as they scrambled to meet targets and that it had not been “ feasible” to handle all the claims.
In some instances, it is alleged, staff did not know the products they were dealing with and sometimes just found in favour of the bank which was deemed “easier”.
Former pensions minister and consumer champion Ros Altmann said she was "shocked" by the Dispatches discoveries.
She said: "No organisation is perfect but the scale of what I saw on their recordings (not all were included in the program) was much worse than I would have imagined.”
She said staff appeared under pressure to cut corners and had not even read the complaints people had painstakingly put together.
They were also discouraged from passing too many cases on for further investigation, “thereby turning applications away which might have deserved to be properly investigated,” she said.
“I think there needs to be an inquiry into this service and a change of practice to ensure better consumer protection.”
Fos responded to the allegations in a statement on its website, saying its non-executive board would undertake a review of the concerns raised in the programme.
It was also talking to and supporting people who are getting in touch with concerns about their own individual cases, it told FT Adviser.
It could not say at this stage how far the review would go in terms of individual cases.
The statement said: “The Dispatches programme on the work of the Financial Ombudsman Service gives an unfair impression of us.
“Every day we make difficult judgement calls that affect people’s lives. Our people are committed to doing the right thing – and we’re determined to provide a fair and trustworthy service for our customers and the best support for our staff.”
Concerns at the Fos first surfaced in July 2016 when a planned restructure came under fire from some employees claiming the shake-up would deliver quick, but not necessarily appropriate decisions for consumers.
A staff survey conducted in June last year painted a damning picture with a mere 19 per cent of staff polled believing senior management at the Fos provided a clear sense of direction and 21 per cent thinking their top bosses were open to feedback.
Fos changed from a structure where adjudicators specialised in a product area and were assigned complaints in that area to one where the person who first receives the complaint will consider the complaint.
On 15 January, speaking before the Treasury select committee, chief executive Caroline Wayman (pictured) acknowledged that staff had been unhappy about the changes and pledged to boost staff morale.
She said: "We are absolutely not removing specialisms. What we are trying not to do is to have queues at the front end, which means we need to be able to be flexible enough to be able to respond to whatever people bring to us in that week."
But Ms Field said the issues identified by the investigation were a cause of concern for the industry and needed to be dealt with seriously.
She called for a review of the Fos training regime to ensure staff have sufficient knowledge when dealing with complex pension, advice and investment claims.
Ms Field said: “An evaluation of internal culture is essential to deal with issues identified such as the obvious lack of necessary training and the setting of unachievable targets, which seriously impacts the decision-making process.”
The FCA is currently consulting on giving small businesses access to the Fos, which could increase the service's caseload by about 1,500 cases a year.
A Fos spokesperson said this would be "well within the caseload variances" the service already plans for but it was "considering whether we need any additional specialist skills to look at the potential new cases".
Ms Field said: “Any planned extension to the remit of FOS should be suspended until we can be assured that staff have the necessary knowledge to deal with the subject matter competently to achieve just decisions.
“These fundamentals need to be resolved to ensure that clients and firms can access a sustainable, impartial, evidence based dispute resolution model.”
Dave Penny, managing director at Invest Southwest, said he was "horrified" by the news.
He said: "We are all dealing with life changing issues both as financial institutions and as ultimate arbiters of the complaints process.
"Accuracy is essential and in order to achieve this, expertise is an absolute prerequisite. It is hard to believe that the Fos believes all staff have the ability to judge all cases and to my mind is a betrayal of trust in favour of attempting to meet arbitrary targets."
He said the Fos had to ensure it trained staff properly and let them specialise. It should also take the flack for delays.
"It is no wonder our industry is not trusted when the ombudsman cannot be trusted. You couldn’t make it up," he said.
carmen.reichman@ft.com
