Regulation 

Fos vindicated as unbiased by independent review

Fos vindicated as unbiased by independent review

An independent review into the Financial Ombudsman Service has found there is no institutional bias against consumers however it has raised concerns about the knowledge of some investigators.

The 53-page review, published today (12 July), was launched after allegations made in the Channel 4 programme Dispatches that some decisions made by ombudsmen may have not been fair to consumers.

But Richard Lloyd, former executive director of consumer rights organisation Which, who conducted the review, said he could not find evidence to support some of these claims - though he made a series of recommendations to improve the service.

Among the allegations was that staff at the ombudsman found in favour of firms because it was deemed "easier" but Mr Lloyd said both consumers and firms could have confidence the service was not institutionally biased against them.

Dispatches also reported the ombudsman had been churning out decisions as they scrambled to meet targets and this meant decisions were more likely to go against consumers.

But Mr Lloyd said: "The data shows no significant correlation between the reduction in pressure and uphold rates – in fact there was a slight reduction in uphold rates.

"This suggests that, overall, ‘target pressure’ did not incentivise caseworkers to reject cases in favour of businesses."

But Mr Lloyd warned that while the Fos was correct to strive for efficiency, this had begun to be seen by staff at the service as the "overriding priority" and he recommended that management shift the focus onto quality.

Another concern raised by Dispatches was that investigators did not have the knowledge to handle complaints, and Mr Lloyd found this could be the case for people new to the role - particularly given the Fos's move to a new model without specialisms.

Mr Lloyd said: "As it adapts its casework model, based on the investigation model which relies on staff being skilled across a range of different types of cases, the Fos has recognised that where these higher risks arise, case-handlers require more support, or that the problem needs to be looked at by an experienced product expert with up to date knowledge.

"New investigators can lack knowledge, confidence and consistent exposure to complex problems, and so more often use internal helplines and product specialists for advice."

He found the Fos has been managing this by giving higher risk and more complex cases to specialist teams.

In his report Mr Lloyd also found flaws in the way the Fos was funded, and called for it and the Financial Conduct Authority to consider consulting on a new levy structure based on the risk firms bring to the market and which allows it to do more stable forward planning.

He said: "The present funding regime – a mix of case fees and levy with the greater proportion of funding coming from case fees – neither supports planning as well as it might nor places sufficient emphasis on preventative work."

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