The chief ombudsman has predicted the use of customer data by the financial services industry could be the next cause of large numbers of complaints after payment protection insurance dies down.
Caroline Wayman, head of the Financial Ombudsman Service, made the prediction while giving evidence to the Treasury select committee yesterday (15 January) evening.
She said the greater use of client data made it easier to access financial services but warned this also came with drawbacks.
Ms Wayman said: "There are quite a few areas of our work where you see the convenience versus security as a real inherent tension.
"Faster payments is something that, on the whole, people welcome and it is great that you are not waiting however many days for cheques to clear.
"It is great, mostly, that you can take out a loan very quickly through a few clicks on your phone but there is also with that greater convenience there is also the flip side of that, when things go wrong and the need to protect against things going wrong and how people use their data.
"I think that is a really interesting area. Not just big data, but in general. I think that is an area to watch."
Her concerns were echoed by Annette Lovell, director of engagement at the Financial Ombudsman Service, who gave evidence to the committee alongside Ms Wayman.
Ms Lovell said: "We were talking recently about the increasing tension that there is between the desire to provide ever more products to individual consumers and the need to ensure that consumers privacy and data is protected.
"You can see there is a potential tension there and if those things aren't managed well by financial businesses that is a potential area of concern. That is something we would want to keep an eye on."
The Financial Conduct Authority has introduced a deadline for PPI complaints, meaning after 29 August 2019 the number of cases the Fos will handle about this will begin to dwindle.
Ms Wayman told the committee this would represent a big change for the service and mean the Fos would have to be "quite a bit smaller" than it is at the moment.
She said the Fos is planning to move its permanent staff off PPI complaints as they die down, with contractors used for these instead, so it is better placed to gradually shrink that side of its operations.
Ms Wayman also addressed plans put forward by the Financial Conduct Authority to beef up Fos to replace ad hoc redress schemes.
This would involve extending the ombudsman service so it could rule on cases involving small and medium enterprises in the wake of the issues raised by Royal Bank of Scotland's treatment of small businesses.
Ms Wayman said the Fos "stands ready" to take on this role.
She said: "We already deal with some smaller businesses but only up to the micro-enterprise limits. We recognise it is very difficult when we have to turn people away, as we do when they are on the border line or just above our limits.
"We are very open to exploring that and for me it is very much about thinking that if we are going to do that, designing something that is fit for purpose to try and, wherever possible, earlier. Trying to help small businesses before things get really knotty and difficult.
"We would want to think about whether we would need any additional specialist skills to do that."
Ms Wayman said there would also be a "volume implication" in terms of the number of complaints the Fos would be dealing with, if the reforms went ahead.
damian.fantato@ft.com
