The Financial Ombudsman Service has revealed how it will cut costs and work differently as the tidal wave of payment protection insurance complaints comes to an end.
David Cresswell, director of strategy at the Financial Ombudsman Service, said 10 years ago there was roughly 350 members of Financial Ombudsmen staff, including 20 ombudsmen, handling 20,000 cases.
Today there are 4,000 members of staff handling roughly 500,000 cases and 300 to 400 ombudsmen.
Even if you remove PPI from the ombudsman’s workload, Mr Cresswell said there had been about a 15 per cent increase in complaints volumes across other product areas excluding “blips” like mortgage endowments and split capital investment trusts.
But now the Financial Ombudsman Service is preparing to be leaner and deal with complaints more swiftly in a world where the deadline of 29 August 2019 has finally been set for payment protection insurance complaints to be made.
Mr Cresswell said: “That has been a key bit of why we have had to shift the way we work. We doubled two years running in size as we took on PPI."
He said while having a call centre as a "buffer zone" to queue queries worked well for PPI, it failed for other types of complaints, which is why the Fos is overhauling how it deals with incoming enquires.
“If it was PPI we then know exactly what five questions to ask next in order to be able to get to whether it is one of those complaints.
“We prided ourselves on the fact you could ring about anything from pet insurance to portfolio management and someone would know just enough to be able to ask the right questions and start you off down the right process.
“That was all very well at the front and hugely cost effective in that if you weren’t getting many questions that day about pet insurance that is fine as you were just taking inquiries about other things but all that then happened is you were just put into queues.
“[But] this is where embarrassingly we would have been talking sometimes about a year or two years wait for you get to the pet insurance ombudsman who then says ‘Actually this is just a really interesting question about contract law and we have a team of lawyers who would have looked at that. What a shame that wasn’t picked up right at the beginning and then it would have been dealt with then and a lot more cheaply.’"
A "substantial amount" of Fos' cost was queue and customer management, he said.
The new approach is designed to avoid this, but takes "a huge leap of faith", he admitted.
"Rather than ombudsmen being the most expensive thing so we put in a cupboard and they only get the most complicated cases or the ones that people have been waiting about for longest, we actually say do that two years earlier [now].