Independent review of FOS is published


UPDATE:  Treasury Committee review now available

In March 2018, a Dispatches TV program aired an undercover look at the Financial Ombudsman Service. It raise several worrying matters and came to the attention of the Treasury Select Committee who asked the FOS to appoint someone to independently review the program.  Whether the review is really as independent as it should be, when the reviewer is chosen by the body being reviewed is perhaps a matter for discussion, but FOS appointed Richard Lloyd, a former “Which” executive director.  Mr Lloyd is also vice chair of the Money and Mental Health Policy Institute and is UK chairman of complaints handler Resolver.

Mr Lloyd’s report has now been published; it is gently critical of FOS, though he does pick up on some interesting issues raised by Dispatches and by the Glassdoor web site.

The report was discussed by the Treasury Select Committee at 2.30pm on 18th July 2018 and Mr Lloyd,  Caroline Wayman, Chief Ombudsman and CEO, and Sir Nicolas Montagu KCB, the FOS’s Chairman were all present, but not at the same time.  The Treasury Committee hearing is available to view on Parliament TV  and is unmissable viewing for FOS watchers. Its a long watch…taking over 2 hours, but you can skip back and forth.

The Treasury Committee gave the FOS team quite a hard time, Sir Nicolas could not answer some of what he was asked because it was not a board responsibility and/or the board has not discussed the review yet.  Ms Wayman came over as a consummate professional but she did acknowledge that there was work to do.  There is little doubt that the review had made FOS think again.  PWC have apparently been paid around £7million to advise FOS on changes which have not been universally accepted.  FOS has a new HR director who will have the job of sorting out the unhappy work force. I was surprised to hear that lawyers now seem to be involved in some FOS decisions and FOS has enlarged its legal department.

Sir Nicolas confirmed that FOS will report on its progress in achieving the reviewer’s recommendations before the end of 2018.


Some snippets from the printed report follow.  A link to the full review is here

Summary (italics are mine)

In summary, I have found that the FOS provides an effective and essential service for many thousands of people. It is important that more consumers use the FOS, knowing that it is not institutionally biased against them, while realistic about its limitations and aware of their right to escalate complaints. But to retain public confidence the FOS must work hard to continuously improve the service it provides for consumers and businesses.

Recommendations (italics are mine)

Service quality

Casework capability
1. The FOS should identify gaps between existing capabilities and what is needed for the future, including in relation to case-handling, developing casework approaches, knowledge support, training and quality assurance. The FOS should then plan for continuous improvement to ensure that the quality of casework, including complex cases, is sufficiently robust and consistent.

Preventing bias
2. Staff continuous development training and incentives that work against bias should be strengthened at the FOS, along with investments in technologies that support staff, enable machine learning and better data analytics. Casework objectives

3. The management approach should focus more on quality, learning, technological support, and motivational team building. There should be a realistic view of productivity targets that enable robust, high quality casework, proper resource planning and appropriate funding.

Complaints about the FOS
4. Clearer, earlier, oral or written communications to consumers should explain the implications of an ombudsman’s decision, and its final and binding nature in the event it is accepted by the consumer. Such communication should also provide an explanation of the right to make further representations and submit additional evidence. Consumers should also be fully informed about their right to make a service complaint. Quality assurance checks should be carried out to ensure that staff are not putting undue pressure on consumers to accept a decision quickly.

5. The single stage complaints process for handling issues should be introduced across the organisation without delay, and an extension of the process that explicitly encompasses both service issues and casework substance should be piloted where senior ombudsmen investigate complaints in the round.

6. The FCA should examine the impact of CMC behaviour in relation to threats of litigation against the FOS, and take this into account in developing new rules of conduct for CMCs, preferably before the FOS takes on the handling of CMC complaints.

Quality assurance
7. The FOS should update and bring together its policies and procedure guides for casework quality assurance and ensure these are better communicated to staff and interested service users. In doing this, it should carry out an assessment of the effectiveness of quality assurance, the scope for improved data collection and analysis, and identify how the quality assurance function could be improved.

8. There should be a continuing role for assurance checks by experienced and knowledgeable staff at arm’s length from the primary decision-making teams, focused on the greatest risks.

Organisational issues 
9. As part of its medium-term planning, the FOS board should reflect on and learn from the operational execution of the reorganisation to date and consider ways to more effectively realise its objectives, including the approach to case handling and the capabilities that will be required. This should include a further exercise to check an appropriate sample of casework, to make sure that decisions made during the early stages of the reorganisation were handled in accordance with the controls and standards put in place at the time. Knowledge, technology and data

10. The FOS should realistically assess the balance between digital knowledge capture and provision and caseworkers’ experience of financial products and services, in particular for complex problems, and value and invest in people accordingly.

11. The FOS should review its investment in information technology, and ensure that planned levels of investment and delivery are fit for operational purposes. Consumer-facing technology that enables people to better manage their complaints should be built on a mobile-first platform that works for those who have been less engaged with the FOS to date.

12. The organisation should invest in building its technical capability for data analysis, to strengthen its early insight for preventative work and engagement with the financial services industry, regulators and government.   Management capability and internal communications

13. Strategic planning should be less top-down and informed by a wide range of experience and expertise within the FOS.

14. Managers at all levels, but the executive in particular, must give a much greater priority to ensuring clear and consistent communication, starting with a demonstrable commitment to an inclusive style of leadership. Communications and staff engagement expertise should be central to future change.

Culture and morale 15. A consistent, strategic and expert approach is needed for staff engagement to be returned to a satisfactory level, including a shift in leadership approach and skills in some areas at senior and middle management levels.

16. Alongside the staff Information and Consultation Council, the FOS should extend its recent work with a trade union, taking into account union membership levels.

17. The FOS should project its medium-term costs based on sensible assumptions about case volumes and the organisational capabilities, human and technological, required to provide a good quality, efficient service.

18. Based on this analysis, the FOS and FCA should consider consulting on a new levy funding structure for the FOS that meets this cost, is based on the risk that firms bring to the market, and enables more stable forward planning.

Strategic planning and risk
19. The FOS board should now lead the development of a new strategic plan, taking into account the conclusions of this review. Board and executive effectiveness

20. The FOS board and executive should, as part of its succession planning, assess its composition, effectiveness, capabilities and skills in the light of this review and strategic planning.  

21. The board should consider engaging an external provider to facilitate its whistleblowing procedures as confidence in the management of the organisation is rebuilt.

Reporting on progress
22. The FOS should publish its review of progress against these recommendations before the end of 2018.

Mr Lloyd’s report in full
Glassdoor website (staff views on FOS)
Treasury Committee hearing shown on Parliament TV 
Yahoo finance

Categories: FOS, Uncategorized

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