Ben Thompson,

Clear Cut Mortgages

The BBC Money Box report showed clearly that there is room for improvement at the Financial Ombudsman Service (FOS) and that the increased pressure it will face when it takes over mortgage and insurance disputes is a cause for concern.

However, there was little substantive evidence that judgements are not ‘fair’, rather that some may be taking too long to come through.

Yet the programme also strongly reinforced the industry’s need for an ombudsman service that maintains the trust and goodwill of both consumers and providers.

There seems little alternative to the current plans. What we must ensure is that the FOS – which already has huge stresses placed upon it – can draw on the resources and co-operation of the industry as it carries out its role.

All of us – providers, distributors and consumers – benefit from a rigorous but fair ombudsman service that ensures justice is done independently and fairly. We all have a part to play in seeing that this role is carried out effectively.

Matt Gilmour,

Infinity Mortgages,

Frankly, I am not concerned. The FOS is there to provide the ultimate backstop in dispute arbitration when avenues with the accused firm have been exhausted. For a consumer to go as far as the FOS, they are very determined and are always going to feel let down when they do not get an outcome in their favour – not necessarily anything to do with the resources of the FOS.

Investigative journalists are very good at tracking down the really ‘hard done by’ consumer who can publicly taint the reputation of an entire organisation.

If forthcoming mortgage regulation achieves what it set out to do – to protect consumers – then the propensity for complaints to the FOS should not be significant. And let us not forget that the FOS is presently stretched due to endowment mis-selling – just as the Personal Investment Authority (PIA) was with pension mis-selling – and it does not last forever.

Bob Sturges,

igroup

It would be wrong to pre-judge the findings of the Money Box programme, but it is clearly in everyone’s interest that disputes between consumers and financial firms are settled quickly and efficiently. The FOS has a key role to play in this process by providing an independent and objective complaints handling service where direct negotiation has failed.

Anecdotal evidence suggests the FOS is struggling with some of its workload. Doubtless much of this is as a result of the flood of complaints over endowment products. In response, the FOS is said to be recruiting 100 extra staff.

Nevertheless, its management must ensure that it is adequately structured and resourced to provide the service required of it. Failure to do so will result in diminished consumer confidence in the financial services sector in general and the independent complaints process in particular.

This cannot be allowed to happen as we prepare to enter a new regulatory era for mortgages; and one in which consumers are more likely to complain in the event of poor service, poor product performance or perceived mis-selling.

John Rattigan,

Cartel

The revelation by the BBC Money Box programme that the FOS is paying bonuses to staff who close complaints quickly will come as no surprise to market watchers.

The FOS has seen its caseload increase fourfold in the last four years, with a 57% increase in the last 12 months. The forecast figures in the FOS plan and budget 2004/05 show that 52% of complaints are unresolved after three months and 20% remain outstanding after six months.

All of this against a backdrop of the FOS taking longer than envisaged to recruit the staff that it requires to deal with its caseload level.

The mortgage industry may have some good news for the FOS; the Mortgage Code Compliance Board (MCCB) annual report for 2003 stated that up to the year-end April 2003 it was contacted by 1132 borrowers regarding mortgage complaints. In the same period the Mortgage Code Arbitration Scheme dealt with 102 cases.

This demonstrates that mortgage firms look upon complaint resolution as an important part of best practice.

Vic Jannels,

AtoM

Perception and reality rarely coincide and, in attempting to deal with consumer complaints, the divergence of views is probably exacerbated. After all, by the time a disagreement has escalated to the level where it cannot be resolved by the parties directly involved, then one or both sides will feel that it is ‘personal’.

The big hurdle is keeping a sense of proportion. Unfortunately, in this litigious age almost any spurious excuse for a claim is held up for examination at the expense of the accused without redress even when they are found innocent.

Given that the FOS is charged to be self-funding, there is cause for concern that available finances will not support the required resource levels to ensure the service does not suffer the type of strain likely to lead to inefficiencies.

Worse still, to potentially poor administration and judgement reflecting badly on the entire industry and doing everyone a disservice.

Regretfully, unless there is a financial commitment from the plaintiff to support their claim the whole process could be reduced to a shambles and the benefit of FOS effectiveness diluted.