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Watchdog snaps at the chasers

The Financial Ombudsman Service has hit out at product providers and endowment-chasers for creating extra work for claim adjudicators.

It criticised standardised procedures used by some firms that sold mortgage endowments and similar processes used by companies offering to handle complaints from consumers.

In its annual plan and budget, the Fos reported it had received almost twice as many mortgage endowment misselling complaints as it had expected. The forecast is for around 67,000 people to have appealed to the Fos during the year to the end of March.

The FOS admitted its business performance was highly dependent on the number of endowment complaints.

Forecasts for the 12 months to March 2005 show that it will have handled 524,000 enquiries compared with 441,462 in the previous 12 months. Of the 108,000 new cases it expects, around 67,000 will be mortgage endowments.

The average cost of handing a complaint will be 495, above the budgeted level of 470. However, in 2000/01, the unit cost was 750. It hopes to push down the unit cost to 465 for the next 12 months.

After endowments, precipice bond complaints make up the second highest number of enquiries.

In the past year, the Fos has recruited more adjudicators to handle the increased number of complaints.

It says: “While some firms seem able to maintain good standards in their complaint-handling operations, others do not. Meanwhile, an increasing number of consumers are represented by claim management companies which operate a similarly standardised approach in representing the customer’s complaint. This has an adverse effect on our productivity and timeliness, which, in turn, affects our costs.”

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