Investor complaints hit a high

Banks, insurers and investment managers are being urged to stick less rigidly to the complaints rule book in an attempt to stem a rising tide of disgruntled consumers referring cases to the ombudsman.

This call for a shift away from “compliance culture” is being spearheaded by
the Financial Ombudsman Service (FOS) as it prepares to hear a record 200,000 new cases this financial year.

In an exclusive interview with the Financial Times, Natalie Ceeney, the new chief ombudsman, said the fact that the service’s caseload grew 46 per cent last year and recently reached 1m in total showed something “had gone really wrong in the system”.

Under the current rules, all UK financial firms must comply with standards on the prompt and fair treatment of complaints – and, if they fail to resolve them in eight weeks, consumers can go to the ombudsman for a decision.

However, Ceeney said: “For me, it doesn’t matter if the firm handles their complaints process in X way or Y way. What matters is that they treat their customers well.” She expressed concern over the prevalence of the “box ticking” mindset, and called for a change of approach.

“We are in a vicious cycle with rules and compliance,” said Ceeney. “We seem to have got ourselves into a psyche of ‘it’s all about rules, it’s all about compliance’ and it has become less about ‘how do we put this consumer’s case right?’.”

While the chief ombudsman is not advocating
that the 100,000 businesses it serves ignore current procedures, she said a “rule-book approach” was stopping some from acting “sensibly”.

“A firm called up our helpline recently and asked if they were allowed to send a customer a bunch of flowers,” said Ceeney. “What kind of world are we in where that is the kind
of conversation we are
having?”

The ombudsman’s criticisms come as the Financial Services Authority (FSA) seeks to push through tighter guidance on selling payment protection insurance (PPI), following the rejection of tens of thousands of complaints about these policies.

New quarterly data to be published by the ombudsman show no let up in PPI complaints, with 13,500 new disputes – one-third of the total workload – in the three months to the end of June.