The Financial Ombudsman Service’s interim chief executive Nausicaa Delfas has said the current economic circumstances are likely to see a rise in the number of complaints.
Speaking at City & Financial Global’s Consumer Protection in Financial Services Summit last week (September 29), Delfas addressed three areas the Fos is working on right now.
These being: the impact of the current economic circumstances on its work and what it is doing about it, its preparations to new areas of consumer regulation and improvements it is currently making.
Given the current economic environment, Delfas explained how consumer protection is more important than ever and that the entire financial services industry has a part to play.
“The current economic circumstances mean we expect to see a growing number of customers experiencing financial difficulties, and more people are likely to need help from financial services firms to get through these challenges.
“Our experience has been that times of economic hardship lead to more complaints against financial services firms, and when there are more complaints against the industry, inevitably more complaints cross our desks as well.”
Delfas, who is stepping down from the role next month, explained that the economic situation is likely to see complaints from those who might otherwise not have complained before.
This could in turn see these individuals become easier targets for claims management companies cold-calling vulnerable people in financial hardship.
“[They] may be more likely to pick up the phone and to lodge complaints as every penny counts. Complaining and getting compensation may make the difference for some people, between paying the gas bill, or defaulting.”
Delfas added: “Our work suggests that those most in need of protection are borrowers in financial difficulty.
“These difficulties can have a knock on effect on other issues such as increased vulnerability to scans or making poor decisions.”
During her keynote at the conference, Delfas urged the industry to continue to work together to combat fraud, and to alert consumers themselves to the heightened risks at this time.
“In light of all these risks, we are preparing to anticipate and prepare as much as possible against an unnecessary increase in complaints,” she said.
One way it is doing this is through the relaunch in January this year of the wider implications framework to ensure that the regulator's UK financial services regulators could work effectively together and to prevent gaps or duplication.
“In the current economic circumstances, we are working together through the framework as with the financial services industry, and with consumer groups to identify customers that would most benefit from our support, and to help them make informed decisions around pensions and investments that reflect their short and long term needs,” she said.