I’m delighted to welcome you to this, the 50th edition of ombudsman news – the regular voice of the Financial Ombudsman Service. Our aim has always been to keep you updated on the issues facing firms and consumers, as seen from our vantage point.
Our articles and case studies this month are typically wide-ranging, reflecting the breadth of our work in general. We take a look at some of the complaints we see involving the contracts that govern the business relationship between banks and building societies and their customers. We set out the way in which – from 1 October this year – we have been dealing with redress in pension cases that fall outside the industry-wide Pensions Review. And we illustrate how we tackle the significant number of queries we continue to receive – from both firms and consumers – about how the time bar rules apply to mortgage endowment complaints.
But busy as we are dealing with the thousands of complaints that reach us each week, we keep an eye - too - on what’s going on in the wider world. Two matters that have been of particular interest to us recently are the Compensation Bill and developments concerning the sale of payment protection insurance.
When the Financial Services Authority (FSA) recently drew attention to poor practice by firms in the selling of payment protection insurance, it came as no surprise to us. We have consistently seen complaints about payment protection as symptomatic of wider consumer detriment. This is a matter the Office of Fair Trading (OFT) is now investigating, following a ‘super-complaint’ by Citizens Advice.
Payment protection is one of the most profitable forms of insurance – at least for the organisations that sell it. But our experience, and that of insurance ombudsmen over the last 20 years, is that it is often sold by people who have little knowledge of the extent of the cover. Sometimes it is sold to people who wouldn’t even be eligible to claim. With both the FSA and OFT now ‘on the case’ – and the publicity this will attract – it is possible that we may see a short-term rise in the number of payment protection complaints reaching us. But we hope that action by the regulators will mean a better outlook in the longer term.
Around this time last year I called for claims management companies to be regulated. The Lord Chancellor has now decided to legislate – a very welcome move. The Bill now before Parliament will mean that those businesses offering claims management services, whether in the personal accident or the endowment claims sectors, will be subject to a regulatory code of conduct to be set out by a new regulator. The Claims Management Council (CMC) – at present a voluntary body – is bidding to become the regulator.
Some of the endowment claims companies we deal with know their business and do their best to understand the basis on which complaints are judged. Others seem to be strong on marketing but weak on expertise. Their service to their customers does not appear to demonstrate value for the fees they charge.
It will obviously be a while before the Bill reaches the statute book – and presumably longer before all the rules and regulations come into force. But if the companies we encounter in the endowment sector want to demonstrate their commitment to proper standards, there’s nothing to stop them joining the CMC in the meantime. I hope that is what we will see happening.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.