Fos to introduce 'proactively settled’ category

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Fos to introduce 'proactively settled’ category
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The Financial Ombudsman Service will introduce a ‘proactively settled’ category for the way it reports business-specific complaints data.

As a result of its consultation and feedback received, the Fos said it will report cases as “proactively settled” where certain criteria are met.

The initiative only applies to complaints where the Fos:

  • Requests the business file on or after April 1, 2023 (and on/before 31 March 2024); or requested the business file less than 14 days before April 1, 2023
  • Within 21 days of requesting the respondent’s business file, the business may offer to settle the complaint, but Fos must be clearly informed within 14 days that an offer is coming. This is a change from the 14 days to make an offer
  • If it receives an offer from a financial business within the 21 days, the Fos will review the offer to determine if it is fair and reasonable. If it believes it is, it will share the offer with the complainant. If it is not fair and/or reasonable, the Fos will inform the parties this is the case and that it intends to investigate the complaint as normal. 

The Fos said it will continue to engage with financial businesses as to its expectations around this initiative, as well as general obligations under the complaints handling rules.

This follows a consultation last month where the Fos proposed extending a change in how it reports cases to help speed up and encourage the earlier resolution of complaints.

It published a consultation on how it reports business-specific complaints data, and was seeking feedback from stakeholders on introducing a “proactively settled” category of complaints on a permanent basis.

The suggestion followed a temporary change in how the ombudsman reported cases between November 2021 and March 2022 in response to increased demand brought about by the Covid-19 pandemic. 

The change meant that instead of reporting on just a “change” and “no change” in outcome in its half-year business-specific complaints, the Fos introduced a third category to record the outcome of complaints - “proactively settled”. 

The rationale behind the change was also partly to maintain business engagement with the Fos as businesses had previously told the service they were reluctant to settle complaints due to potential negative public connotations of a higher uphold rate.

In a feedback statement today (April 3), the Fos said as a result of the responses it received, it will report cases as “proactively settled” where certain criteria is met. 

This will be a trial for the 2023/24 financial year.

Feedback received

The Fos said it received 56 responses where it said a majority were supportive of the proposals.

Although most respondents were supportive, there were some concerns raised, the Fos said.

Some felt that financial businesses could be disincentivised from handling complaints properly and actively circumvent their responsibilities under the complaint handling rules, using this initiative to mask in-house problems or to ‘out-source’ complaints handling to the service. 

The Fos said: “We agree with the feedback that this initiative will not only lead to faster resolution, but that the safeguards we have put in place to review offers, will ensure that the right outcomes are being reached.

“This initiative is voluntary as we don’t expect that all cases can or should be reviewed in this way. This is one of the reasons that we will review offers before they are put to consumers. 

“Businesses are free to make offers on any cases they feel it is appropriate. But if we don’t think it is fair, or there is complexity which requires further investigation, then these cases should not be included.”

It was suggested by one respondent that this is being done to reduce backlogs at the service rather than focus on customer outcomes. 

“Although backlog reduction was the reason for the 2021/22 initiative, that is not the aim here,” the Fos said. "We have long seen cases that can be resolved early on, and we believe it is correct to trial a formal process for earlier resolution with proportionate incentives and appropriate safeguards.”

A number of respondents also felt very strongly that the Fos should not be charging a full case fee for something that it is not investigating fully. 

Some said 14 days is not enough to effectively review a complaint and that 21 or 28 days is a more realistic timeframe. 

“A prevailing theme was the desire for the process to be clearly mapped and defined, to avoid confusion or ambiguity,” the Fos said. 

“For example, the process around requesting an extension, or whether counter-offers could still be recorded as proactively settled.”

The Fos said it understands the views and strength of feeling about a lower case fee for these cases and is currently undertaking a wider review about differential case fees, including charging by case stage, and as such, it is not the right time to undertake a separate piece of funding work. 

“However, as part of this initiative, we will be collecting data which may prove helpful to ascertaining the feasibility of different price points for early closures in future (although no conclusions about this can be reached at this stage),” it said.

“Our aim is to consult on differential case fees in the 2024/25 plans and budget consultation later this year.”

 With regards to giving financial businesses 14 days to make an offer, it said this aligns with its standards complaints process.

“However, based on feedback from stakeholders and reviewing information from the original trials, we can see that allowing slightly longer is likely to generate a better quality of offer,” it said.

“As such, we will allow financial businesses 21 days from the date we have requested their business file to make an offer – however, we must be clearly informed within 14 days that an offer is forthcoming.

“This will enable us to better plan for, and monitor, offers.”

The Fos said it will be issuing further information which will provide information on how offers should be submitted and the process to progress them.

sonia.rach@ft.com

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