The Financial Ombudsman Service is playing an increasingly important role in the redress and remediation as a result of Covid-19, having already seen a steady uptick of case referrals due to increasing pandemic-related complaints.
Whilst the Fos is not the conduct regulator, its decisions nonetheless can help firms understand where its behaviours may lead to customer complaints in the future.
Further, Fos decisions can often be the first indicator of systemic issues within their business which may require assessment and resolution, together with any potential customer remediation exercises to put things right and minimise regulator scrutiny.
The importance of this is even more acute as financial services firms continue through the unchartered waters of Covid-19 particularly, for example, in respect of vulnerable customers and the considerable work the FCA has been doing in that space in recent years.
Below we look at the role the Fos will continue to play in handling customer complaints, how this may develop due to the pandemic, the Fos's approach to vulnerable customers, and the potential impact on financial services firms.
It is also likely that it will begin to play a greater role in determining more complex cases that financial services firms are unable to resolve themselves, having implications for approaches to existing and future complaints-handling.
The Fos itself has acknowledged that greater role in its 2020-21 budget plans and this is consistent with the FCA's areas of focus as seen in their Covid-19 guidance webpages.
In tandem with this is an increased scrutiny of firms' responses to customer difficulties in other areas. For example, the High Court is due to judge the test case brought by the FCA on the validity of business interruption (BI) claims, which involves considering several major insurance companies' policies.
It is a decision that will be closely watched by the Fos and the wider market given the profound implications it may have on financial services' firms and customers alike.
Financial advisers who advised on those policies in the first place will be as interested in the outcome as insureds and insurers; particularly as policyholders may look to their insurance advisers if their BI insurance does not cover what they thought it did.
On top of this, we expect that the Fos's well established fair and reasonable decision-making remit, will be stretched even further in respect of Covid-19-related complaints.
For example, there have been certain insurance cases where this approach appears to have been applied, where the Fos has noted that insurers should not only consider a strict interpretation of the policy terms, but what is fair and reasonable in the particular unprecedented circumstances.
The Fos has also pointed out that insurers might wish to consider, where there is a potentially valid claim, if there is scope to make interim payments earlier than they might otherwise do.
Similarly, in the area of short-term lending - where the Fos uphold rate for payday loan complaints against firms is 70 per cent - the Fos has noted that some short-term lenders are slow to engage fairly with complaints and this has resulted in a persistent level of CMC activity in that space.