How do you account for the continuous rise in the number of complaints that you are dealing with?
These days, people have higher expectations of the way business is done and stand-ards themselves have risen.
In addition, every now and again, something happens, such as the endowment letters currently going out, which has significantly increased the number of complaints.
For some time, half our new cases week in week out have been concerning endowments due to the letters.
What are the nature of these complaints?
Some are clearly missales. For example, when the endowments are sold to people approaching retirement without a legitimate reason or sold to these people as such a good bet that it would pay off the mortgage before they retired or told they could sell it early. Also, right-to-buy cases, people with the wrong risk profile – ultra-cautious investors with no understanding that endowments have anything to do with the stockmarket.
Churning is also a problem. People move house and cancel the endowment, not realising how much they were going to lose due to the impact of up-front fees. If they had kept it instead, they would be better off.
What do you see as the greatest challenge in the coming year?
There is the challenge of bringing all the schemes together. Then there is the big issue of endowments unsettling people. It is still at an early stage but has made the most difference to the number of complaints and the breakdown of those complaints and there are millions of letters not out yet.
Complaints first have to go to companies before us and that takes a number of weeks to go through the complaints' procedure. The absolute deadline for sending out the letters is not until September 2001,so we expect the peak time to be next year. It will keep us off the streets.
We think it will be useful if people in the industry had a better idea of what was happening so in September we will issue early guidance for the industry about how things should be approached and remedied.
There will also be guidance for consumers at same time telling them not to panic, to take advice and to realise compensation is not automatic.
What will the remedy be?
It will be different in different circumstances but basically the idea will be to look at the position that people would be in if they had acted on appropriate advice, ask where would they be and put them in that position. In other words, compensate them to the amount they would have put into another mortgage.
How does this crisiscompare with that of the pension review?
There will be considerably more difference between one company and another. We will see pockets of incidence, depending on a company's relationship with building societies, penetration into the market and the client base.
This means one company may receive more attention than another for a good reason as well as for cutting corners. How companies respond will be a commercial judgement.
You have a very wide remit as both investment and PIA ombudswoman.
Yes, they are very different bedfellows. In September, we will decide how to take things forward. There may be a diff-erent focus group for each industry grouping – the IFAs, the life offices, the fund managers – because the nitty gritty of their concerns are different.
Will the case fee be the same for IFAs next year?
The proposed structure will see a slight change but there will be a consultation in the autumn. Half our costs of £25m or so will be met by a general levy, even if a firm has no cases.
As well as fostering a feeling of membership, it will build consumer confidence. This levy will be banded. The other half of our costs will be raised via a case fee. Total charges should fall within three years as the ombudsman merger costs pass.