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FOS appoints independent reviewer after Channel 4 exposé

FOS chief executive Caroline Wayman

The Financial Ombudsman Service will be reviewed by an independent person following claims of poor staff training and alleged biases in its decisions that were exposed in a recent Channel 4 investigation.

Treasury Committee chair Nicky Morgan wrote to FOS chief executive Caroline Wayman on 13 March asking for more information about the findings of the Dispatches report.

In her 20 March response, Wayman says the FOS has appointed an independent person to conduct a review.

In a statement, Morgan says: “The independent review must consider the FOS’s approach to decision-making, the assurance process, and the causes of low staff morale. The committee will want sight of the terms of reference before they are finalised.”

She says: “The review should be demonstrably independent, all findings of the review should be published, and the committee will expect to take evidence from the reviewer.”

In the undercover investigation, FOS employees said they used Google to find out what some financial products are and that, in some cases, the complainant had a greater level of knowledge than FOS staff.

Blog: FOS didn’t deserve the Channel 4 treatment

In Morgan’s letter, she asked for responses to claims staff are given cases they are unqualified to work on and that the FOS has a bias to decide in favour of banks.

Wayman responds that all new case handlers that join the FOS are in the organisation’s “training academy” for six months.

There, the training includes law and regulation, product knowledge, evidence-gathering skills, understanding how the FOS works and the standards its requires.

Wayman says: “On joining the service, all new case handlers take part in a comprehensive training programme – including a session with me as chief ombudsman to talk about the role of the ombudsman service and the values of independence, impartiality and fairness that are at the heart of what we do.”

On the bias claims, Wayman says that, depending on the product, the business involved and when and how things happened, its published uphold rates range from around 10 per cent to 90 per cent.

In her letter, Morgan also asks for an approximate number of people who have been impacted by poor case handling and errors. The Dispatches programme claimed there were 500,000 payment protection insurance complaints that needed to be relooked at.

Wayman says: “The 500,000 figure given in the programme appears to represent essentially every PPI complaint that hasn’t been upheld.”

She says that since 2010/11 the FOS upheld 923,656 PPI complaints in total, and did not uphold 495,877.

Wayman adds: “We are required by law to look at the individual circumstances of each complaint and it is not the case that every PPI product was inappropriate for every consumer – reflected in the complaints-led approach to PPI redress route taken by the regulator.”

Morgan also asked what evidence there is to assure parliament that the problems identified in the Dispatches investigation have not led to poor decision making at the FOS.

In response, Wayman says the FOS has a well-established “quality assurance framework”.

Wayman says: “As a body established under statute, as an alternative to the courts, providing finality in dispute resolution is an important principle for the ombudsman service. The circumstances in which we can reconsider a complaint are extremely limited.”

She adds: “We may, however, consider the matter afresh if material new evidence subsequently becomes available which the ombudsman considers likely to affect the outcome. And as a public body, our decision-making is of course subject to judicial review – which means our decisions come under scrutiny by the courts.”



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There are 5 comments at the moment, we would love to hear your opinion too.

  1. I don’t believe that the documentary findings come as a surprise to many, but have your review and be seen to be taking action after the event!

    Same old show and nothing will come from it other than noise!!

  2. Were the FOS not snowed under with having had to look at nearly 1½m (initially rejected) complaints about PPI mis-sales and who knows how many more still awaiting consideration, it would almost certainly be able to allocate considerably more of its resources to improved staff training and be more selective in terms of the calibre of staff it recruits. It just doesn’t have the capacity to cope with this kind of caseload and it may well be unfair to criticise it for not doing what’s beyond its resources to handle.

    The FSA, by having failed totally to enforce its own guidelines on best practice for the selling of PPI, is surely the prime body responsible for having looked the other way and allowed this state of affairs to come about. But Ms. Wayman is in the unenviable position of not being able to say so. Were she to do so, she’d be accused in the media of trying to shift the blame elsewhere and incur the wrath of the FCA which, as we know, has a pathological aversion to being held to account for anything.

    Another factor, as reported elsewhere, is that the banks appear to have adopted a standard policy of rejecting virtually all complaints about PPI and dumping them on the FOS because the FOS case fee is less than the cost of investigating them themselves. This, of course, adds yet more to the FOS’s caseload. Surely the FCA should step and do something about this, perhaps by mandating a system of punitive fines for cases on which it’s apparent that no real effort has been made to investigate thoroughly the merits of a complaint before rejecting it.

  3. Independent Reviewer………….Oh yeh!!!

  4. “Ms. Wayman is in the unenviable position of not being able to say so”

    Ms Wayman is in the rather more enviable position of being paid almost twice as much as the Prime Minister.

    If she does not like the pressure she can do what many of her now erstwhile staff have done.

  5. Is the review going to look at the appalling way in which the FOS treats the adviser community – don’t hold your breath

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