The Financial Ombudsman Service (FOS) is proposing to change the way it processes complaints to encourage firms to solve complaints faster.
The regulator has suggested adding a new category within its biannual business-specific complaints data to recognise firms which resolve issues before a formal investigation has begun.
Any complaint resolved by a fair and reasonable offer put forward by a business within 14 days of the FOS requesting the respondent business’s complaints file would be recorded under the new “proactively settled” category.
This would not affect the firm’s uphold rate which the FOS said was a significant motivating factor for many organisations.
By setting a time limit for offers to be considered as proactively settled, FOS said it believes this will drive good behaviour from businesses in providing timely responses.
It also believes this would incentivise financial businesses to settle complaints proactively and pragmatically at an earlier stage, which in turn would help to bring closure to affected complainants.
The move builds on the successful temporary amendment introduced in the autumn of 2021 to mitigate operational issues brought about by the pandemic.
However, this new process will also apply to new complaints brought as well as those already submitted.
‘Substantial’ impact of temporary amendment
When launching the original amendment the ombudsman noted that engagement with businesses and consultation responses suggested it would act positively as an incentive for businesses to settle complaints pragmatically at an earlier stage, without the need for a full investigation by an investigator or ombudsman.
During the five months the initiative was live, it found this to be the case – with around 100 businesses making nearly 7,000 offers to resolve complaints.
FOS added this had a “substantial” impact on its complaints queue, eased operational pressures at businesses, and helped complainants get fair answers more quickly – particularly in the area of fraud, where over 2,000 victims of scams were reimbursed more quickly for the money they lost.
The regulator said the November 2021 amendment was introduced primarily to address the challenges brought about by the Covid-19 pandemic, which resulted in a substantial increase in demand for its service and caused operational issues for its service and businesses alike.
FOS considered a firm to have “proactively settled” a complaint if:
- It made an offer to settle a complaint which had become a chargeable case before 31 October 2021 and before it had issued its initial opinion on the complaint;
- It considered the offer was a fair way to resolve the complaint, and;
- The complainant accepted the offer, or if they did not, that FOS agreed that the offer was a fair way to resolve the complaint when investigating and deciding it.
FOS added this was limited to complaints that had been referred to the service on or before 31 October 2021, to maintain a focus on cases already in the queue.
New category proposal
It chose the requesting of the respondent business’s complaints file for the new proposal as this is the point at which FOS informs both parties it is satisfied the complaint is chargeable – a point it often calls conversion.
FOS added that as it usually asks a business to send its complaints file within 14 days of conversion, it felt 14 days was a reasonable amount of time for a business to reconsider its position and make an offer to settle a complaint.
But the regulator also clarified that the amendment differs to the one made in the 2021/22 financial year in that it will apply to new complaints, rather than ones already referred to the service.
“The previous amendment addressed a unique set of circumstances, caused largely in part by the pandemic, which created an urgent need to resolve a backlog of complaints,” FOS said.
“This new proposal focuses on new complaints being referred to FOS, with the aim of resolving them at an earlier stage.
“We intend to make this amendment for the entirety of the 2023/24 financial year. We will monitor its effectiveness throughout this time and review the data, insight and feedback we receive before making a decision on our longer-term reporting into 2024/25 and beyond.”
The consultation runs until 20 March and its decision and any associated plans will be published by 3 April 2023.