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Nic Cicutti: Issues at FOS swept under the carpet again

New report fails to acknowledge life-changing consequences of delayed and poor decisions

Regular readers of this column will recall how my family home was gutted by fire around four and a half years ago.

About the only thing left standing was the brick walls and we were forced to move out for almost two years while the property was restored.

It was over the course of that journey that I came into contact with the Financial Ombudsman Service. Our insurer decided to impose an arbitrary rebuild cost for our home that bore no resemblance to the terms of the policy we had taken out.

We complained to the FOS and, within a matter of weeks, the company agreed the entire cost of the rebuild would be met, up to the full limit set by our policy.

I have always wondered what made the insurer back off. Was it the involvement of a FOS case officer, who asked for the relevant documents to be provided? Was it the free advice offered by a friendly loss adjuster I know during a couple of stressful periods, including access to one of the country’s top legal experts for a free 20-minute telephone consultation?

Or was it the fact I was uniquely privileged in my ability to document our problems with the insurer in the pages of Money Marketing, as well as other national media outlets?

If I am honest, my money is on the second and third of these possibilities. Not because the FOS’s case officer was not on the ball (we will never know as the complaint did not proceed further), but because the Ombudsman’s decision-making processes are desperately cumbersome and opaque, at least as far as consumers are concerned.

FOS training should be top of reform list, reviewer says

I was reminded of my own battle last week after reading the independent report into the FOS’s work by former Which? executive director and current vice-chair at the Money and Mental Health Policy Institute Richard Lloyd.

Lloyd was commissioned to write the report after a hard-hitting Dispatches TV programme earlier this year, which tore into the Ombudsman and made a number of allegations about its work.

Such allegations included staff not qualified to deal with complex caseloads; that staff were biased against some complainants; that there was pressure to deal with complaints quickly, leading to outcomes in favour of big banks; and that pay and promotion prospects of staff were affected if performance targets were not met.

Lloyd’s report debunks many of the claims made in the Dispatches programme, or sets them in their context of an overworked service attempting to deal with hundreds of thousands complaints each year, most of them PPI-related. This created pressure on managers, with staff being told in 2016 they must resolve at least five cases a week. This has since been revised to 3.5 cases a week.

The result, according to Lloyd, was a catastrophic loss of morale among staff, with many believing a focus on numbers rather than quality meant senior managers were out of touch.

Lloyd records the narrative he has been given by FOS executives, to the effect that many of these problems were in the past (not that dim and distant it needs to be said, given that we are talking barely two years ago) and that things are now improving. He says that senior managers need to keep these issues under review to prevent similar problems from arising again.

What I find interesting about the entire report is that, while it describes in great detail the various internal processes that produce the FOS’s outcomes, the views of consumers barely manage to get a look in, whether mediated by claims management companies or voiced independently of them.

FOS dispels ‘myths’ about bias against advisers

There are times when it feels that, by citing the extreme difficulties the FOS faces in delivering outcomes under massive time pressures, Lloyd is a captive of the Ombudsman, rather than reflecting the frustrations consumers feel when they wait months for a decision and then find that it is riddled with inaccuracies. Their voices do not seem to figure in his report.

Earlier this year, I was contacted by a couple who lost their own home in a fire in 2016. After many months of being given the runaround from their insurer, they complained to the Ombudsman in September 2017. It took until January before their case was allocated to someone.

When I tried to find out why that was, I too was given the runaround by its press office. When I wrote about it in Money Marketing, I was contacted by several newspaper journalists who told me they had experienced the same problem.

What is missing from Lloyd’s report – and from the FOS – is the acknowledgement that delayed and poor decisions have potentially life-changing consequences for tens of thousands of people.

In the same period we had our fire in the winter of 2013/2014, many thousands of homeowners suffered devastating damage to their properties from the heavy floods across much of the country.

I am absolutely convinced that insurance companies fobbed many policyholders off, making them offers that fell below what they should have been entitled to.

If they complained, did they obtain the right outcome from the Ombudsman? I very much doubt it.

Nic Cicutti can be contacted at



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. As somebody who has accumulated hundreds of FOS final decisions and adjudications (not about my advice I’m anxious to confirm), and as someone who pays great attention to the FOT decision database on its website, I can confirm that reaching the wrong conclusion is a regular outcome.

    Adjudicators are not that skilled and on a starting salary of c£25,000 why would they be.

    I also know from speaking to ex-adjudicators that they are told (off the record, of course, to arrive at certain desired outcomes.

    Advisers cannot expect fairness and balance from the FOS because it is not in its DNA. It is a political animal designed to provide consumer confidence and if arriving at an incorrect decision achieve this, so be it.

    Ex Chief Ombudsman, Walter Merricks explained succinctly to the Cardiff Faculty of Law in October 2001 – “FOS is an unusual creature. One that I suggest Parliament would not have dared to create had the groundwork not been laid by a series of voluntary initiatives. It is a one-sided scheme offering an unlevel playing field broadly supported by those playing up hill”.

  2. If guaranteed anonymity, I imagine that many people at the FOS, staff and executives alike, right up to Caroline Wayman, would declare the primary cause of its current crisis to be the avalanche of PPI complaints with which it’s been inundated for the past few years. And the reason for that, as we all know, is the total failure of the FSA and FCA to police its own best practice guidelines on how PPI should be sold.

    A knock-on effect of this is that PPI is now, in the public eye, a totally tarnished product. As a result, large numbers of people for whom it may well be entirely suitable and which, should they hit hard times, could save them from losing their homes, won’t go anywhere near it. That’s assuming, of course, that any mortgage lender will even dare to mention it any more.

    Another cause of the avalanche of cases ending up with the FOS is that, anecdotally, a number of the banks have adopted a policy of automatically rejecting every complaint.

    The only way to deal with that would be for each FOS adjudicator to rule not just on the complaint itself but on whether the recipient of the complaint made a reasonable case for rejecting it, with a fine for having just dismissed it out of hand. After all, the rules do say, I believe, that complaints are supposed to be given proper consideration. This clearly isn’t happening and on a scale almost as great as that of the product having been mis-sold in the first place.

    But the problem with that is that it would make even greater demands on adjudicators’ time, require additional training and make the problem even worse.

    So it’s a right royal mess, with no workable solution in sight, for which Sants got a knighthood and Bailey a bonus of £75,000. Is it just me or does this seem to be not quite right?

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