Financial Ombudsman Service  

Where now for the next Fos chief?

However, she admitted that as a demand-led service, the Fos continued to face significant uncertainty in the volume and type of complaints being referred to the ombudsman – two factors that are having a direct and significant impact on its timeliness.

Another has been the pandemic, which placed a number of additional pressures on its service in the past year.

Wayman said: “Government measures to reduce the spread of the virus meant we had to operate differently. Not only did our people face their own challenges – such as home-working in less than ideal conditions and balancing childcare responsibilities – our customers were also impacted. 

“Some larger financial businesses had to temporarily suspend their work with us due to staff shortages and some smaller businesses needed more time while they concentrated on the difficulties facing their businesses during the pandemic. 

“And, on the other hand, some consumers needed more time to send us the information we required while they focused on more immediate concerns affecting their lives and livelihoods. This meant that we were unable to progress some cases as quickly as we would have liked.”

As at November 26 2020, the Fos had 56,348 open cases that were more than six months old and 23,625 open cases that were more than two years old – 18,600 of which were payment protection insurance cases relating to a single issue with a claims management company.

Compensation limits

According to Kevin Moss, a director at Valid Path network, the problems with the Fos stretch beyond the organisation itself. He says a "vicious cycle" has been created where the increase in the upper limit of compensation to £350,000 from £150,000 in 2019 – set by the Financial Conduct Authority – has led to a mushrooming of claims.

And with a number of professional indemnity insurers exiting the market during this period of increase, businesses unable to get affordable PII have been unable to pay the compensation themselves, laying the cost at the door of the Financial Services Compensation Scheme.

This was a point raised by the TSC to Wayman, who responded that although advisers had raised concerns with her about being priced out of the market owing to the impact of higher compensation limits on PI, she did not have visibility over the entire market to conclude that PI had indeed become widely unviable.

Valid Path's Moss is also critical of the Fos’s decision-making process. He says that as the Fos is not bound by the law – making decisions based on what it thinks is fair and responsible – this has created a culture where adjudicator decisions are more subjective than objective.

Moss says: “If you had an objective, reliable methodology, [decisions] would not hinge on who is doing [the case] or how warm and kind they are feeling on a particular day. It would eliminate all that subjectiveness. That’s a large part of the problem.”