Fos: ‘Times of economic hardship lead to more complaints’

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Fos: ‘Times of economic hardship lead to more complaints’
Nausicaa Delfas, interim chief executive at the Financial Ombudsman Service

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.”

Those most in need of protection are borrowers in financial difficulty.

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. 

We work on the basis that firms should be held accountable against the standards that prevailed at the time that the problem arose.

“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.

New areas of consumer protection

Delfas touched on new areas of consumer protection such as the new consumer duty and the buy now, pay later schemes.

“We welcome the instructions of the new consumer duty and its aim to raise standards, as the industry continues to innovate. 

“We're working closely with the FCA to ensure that we provide consistent and complementary clarity on its interpretation, while respecting our different statutory roles.”

Delfas explained that she has been “mindful” of the fact that there have been concerns that the Fos may apply the rules retrospectively. 

“I can reassure you that this will not be the case,” she added. 

“We work on the basis that firms should be held accountable against the standards that prevailed at the time that the problem arose.”

She said the Fos is working closely with the FCA to develop case studies which it will publish during the implementation periods across a range of different business areas including insurance, mortgages, banking, pensions and investments. 

“The case studies will be illustrative of real life examples of complaints we have previously seen. 

“They're not intended to be examples of how all issues might be dealt with under the new duty, rather to guide firms in thinking about how the issues might be dealt with under the new duty.”

Delfas said the Fos will continue to engage with the industry and consumer groups over the implementation of this. 

In terms of what this means for the Fos decisions, she said it has “always had a wide, fair and reasonable jurisdiction” and said it hopes the new consumer duty will result more in preventing unnecessary complaints by tackling unfairness of source and have less impact on the outcomes that it reaches. 

Delfas was appointed as interim chief executive and chief ombudsman last April, after Caroline Wayman stepped down amid a backlog of complaints.

This month, Abby Thomas will take over as chief executive and chief ombudsman at the Fos after being appointed in June. 

Thomas will join the Fos from Virgin Media O2, where she was director of the company’s strategy marketing and transformation for business programme.

Prior to that, she spent two years as global head of customer operations at Vodafone Business and four years at BT as a transformation director.

sonia.rach@ft.com

What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know