If a financial firm has let you down and isn’t putting the situation right, then you have a useful ally in the form of the Financial Ombudsman Service (FOS).
The FOS is a free and independent service, which will look into your case and could compel the financial firm to dig into its pockets and cough up compensation.
There are worries about the FOS though, with the service coming under fire from MPs for how slowly it is tackling its current caseload and the inevitable knock-on effect this will have on our finances.
I haven’t heard anything
Last week the Treasury Select Committee ‒ the collection of MPs who are tasked with examining not only the Treasury itself but also the various associated bodies like the Bank of England and FCA ‒ published a series of letters between its chairman, Mel Stride, and the Financial Ombudsman Service.
It highlights some serious concerns with how the Ombudsman is currently operating, challenges it needs to overcome in order to properly fulfil its role.
A big worry concerns how quickly cases are resolved. More than 56,000 cases have been open for more than six months, while over 23,000 have been going on for more than a year.
Just assigning cases to specific handlers within the FOS is also taking too long ‒ more than 35,000 cases have yet to be assigned to someone to deal with.
It’s not just how long the cases are taking that’s also causing some worries though ‒ there’s also the money involved.
It takes the FOS an average of £960 to resolve a case, but with case fees of £650, it is having to turn to its reserves in order to keep afloat. That’s obviously not a situation that can go on indefinitely.
Why are things taking so long?
The FOS has a significant workload, but it has fallen of late. According to its latest annual report, covering 2019/20, it received 271,000 new cases.
That’s down by 30% on the previous year, which is in no small part down to payment protection insurance (PPI) no longer being a going concern.
That isn’t necessarily helping with those case times though.
Caroline Wayman, chief executive of the FOS ‒ in her letters to the committee ‒ pointed out that it is now spending less time on “straightforward mass claims” like PPI and instead having to deal with greater numbers of complaints that are “far more complex and time-consuming to resolve”.
In other words, fewer cases don’t mean less work ‒ it can actually mean the opposite.
And then, of course, there’s the pandemic.
Obviously, this has dented the speed of the FOS’s own staff, but it has impacted how financial firms work with it too.
Wayman noted that “ Some larger financial businesses had to temporarily suspend their work with us due to staff shortages and some smaller businesses needed more time while they concentrated on the difficulties facing their businesses during the pandemic”, while some complainants took longer in order to provide the relevant documents to support their issues.
Why these delays matter
The FOS is an extremely important service, as it prevents financial firms from fobbing us off when we complain.
Yes, we have to give them the chance to correct the errors first, but the FOS means that if they still deny any wrongdoing that we have somewhere else to turn, who can cast an independent and expert eye over the facts.
Check out our guide to how the FOS works and how to make a complaint.
That said, waiting for a year in order for your case to be dealt with is extraordinary.
It would be one thing if this was only happening with a handful of cases, where the complexity involved means it inevitably takes longer for the truth to come to light.
But for more than 23,000 cases to take such a long time to be closed is far, far too many.
What’s more, things have got worse.
According to data from Wayman, 40% of cases in 2020/21 have been resolved within three months, down from 56% the previous year.
While more than two thirds (69%) of cases are cleared within six months, that’s still down on 76% from the year before.
And this matters.
By taking an age to correct these errors, it leaves innocent victims out of pocket for longer, increasing not only their financial worries but their stress as well.
It also sends a worrying message to financial firms, suggesting that the FOS isn’t coping with its current workload, given irresponsible firms license to chance their arm and see what they can get away with.
The Ombudsman has been on a recruitment drive so that it has more capacity to deal with complaints, but there’s no doubt that this will take time to feed through into the case backlog.
And given the vast number of initiatives introduced in order to try to protect people during the pandemic and the financial issues people are already experiencing, it’s not too much of a stretch to imagine there will be a spike in cases for the FOS to deal with in the months and years ahead.
It’s in all of our interests that it’s actually able to deal with those cases promptly.