The Financial Ombudsman Service has proposed temporary changes to its case reporting to entice firms to settle early and reduce queues at the complaints body.
In a consultation paper published today (October 4), the Fos said it wants more firms to settle complaints before they are investigated by the body but acknowledged firms were concerned about building a bad image if this leads to high uphold rates.
To allay these concerns the Fos wants to create a separate category for recording a complaint that is proactively settled by a business before the Fos has issued its opinion.
Complaints settled in this way would not – for a restricted period – be recorded as having either a change in outcome or no change in outcome, and would not contribute to a business’s overall uphold rate.
The category would apply to claims already received by the Fos and those settled before the end of the financial year.
It said: “Although there are of course other considerations that will sit behind a business’s decision to settle a complaint, [high uphold rates] might act as a disincentive to resolving complaints proactively.
“In recognition of the unprecedented events of the past year, and the increased number of customers waiting for an answer and possible redress, we therefore propose temporarily to adjust the way we report cases resolved in this way, to encourage financial businesses to settle some of their complaints proactively and pragmatically.”
The Covid-19 pandemic resulted in a substantial increase in customer demand for the Fos’s help.
In its plans for 2020/21, the Fos had anticipated receiving 145,000 new non-PPI complaints, but it ended the financial year having received over 237,000, an increase of more than 60 per cent.
The latest proposal comes as a way to help it work through these pandemic-driven complaints.
The Fos intends to put this measure in place for any complaint resolved in this way before the end of the financial year, March 31, 2022, after which point it would revert to recording outcomes as it does currently.
The Fos said: “As this proposal is targeted at reducing queues that have been made worse by the Covid-19 pandemic, we intend this to be a temporary amendment to assist in resolving complaints built up during this time.
“Although the pandemic is still ongoing, feedback from financial businesses suggests that most have now adapted to the operational challenges it presented, and our own complaints data shows that new complaint volumes have fallen significantly since the height of the pandemic and have stabilised at lower levels for several months.”
It added: "We believe this would incentivise financial businesses to settle complaints proactively and pragmatically at an earlier stage, helping to bring closure to affected customers while also reducing the operational strain on both firms and the Financial Ombudsman Service.”
The consultation is open for two weeks only, until 18 October.
Earlier this year, former chief executive of the Fos Caroline Wayman stepped down from her role after it was revealed that the ombudsman is facing a backlog of 158,000 complaints.
Last month, the Fos warned consumers to be “extra vigilant” as it said the number of customers asking for help with fraud and scams complaints increased by 66 per cent in the first quarter of the 2021/22 financial year.
sonia.rach@ft.com
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