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Financial Ombudsman to launch review following damning undercover sting

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Written by: Tim Chen
23/03/2018
The Financial Ombudsman Service (FOS) will appoint an independent party to investigate claims of poor staff training and alleged bias towards banks following a damning undercover report.

FOS chief executive Caroline Wayman made the announcement in a response to Treasury Committee chair Nicky Morgan MP, saying that to “better understand and address the concerns raised by the [Dispatches] programme, our non-executive Board will be appointing an independent person to carry out a review.”

Morgan wrote to Wayman on 13 March asking for further comment following Channel 4’s ‘Dispatches’ programme.

The Dispatches investigation claimed that FOS staff who had “inadequate training or understanding of financial products are judging cases, with some having reached decisions in favour of the banks, without properly reading case files”.

In certain cases, FOS staff said they used Google to find out what some financial product were, and in some instances the complainant had better knowledge of the products than the FOS employees.

‘Always risk of potential bias’

In her 20 March response, Wayman insisted that the FOS has a “well-established quality assurance framework” which processes several thousand checks on cases every month, as well as detailed file review sessions with its executive team and non-executive board.

She said that upon joining the service, all new case handlers take part in a “comprehensive” training programme, including a session with Wayman to talk about the role of the FOS and its values, and a six month stint in the FOS’ training academy.

Regarding the alleged bias towards banks, Wayman said that “the independence and impartiality of the ombudsman service is central to everything we do”, adding that “in any dispute resolution mechanism there is always a risk of potential bias, one way or the other”.

She also said that uphold rates are inaccurate proxies for bias on their own, citing that FOS uphold rates range from 10% to 90% depending on the business involved, the nature of the product, and when and how things happened.

In particular, Wayman mentioned the claims made in Dispatches that some 500,000 PPI complaints need to be reopened, saying that the figure represents “essentially every PPI complaint that hasn’t been upheld”.

She added two thirds of PPI cases were found against banks, and “it is not the case that every PPI product was inappropriate for every consumer”.

Dismay

Nevertheless, Wayman said that despite the “extremely limited” circumstances in which the FOS could reconsider cases, it would do so “if material new evidence subsequently becomes available which the ombudsman considers likely to affect the outcome”.

Commenting on the correspondence, Morgan said: “The Dispatches programme raised concerns about the FOS’s decision-making and governance.

“These have been echoed by correspondence received by the committee from current and former FOS employees, who have also expressed dismay about poor culture and low morale.”

The independent review must consider the FOS’ approach to decision-making, the assurance process, and the causes of low staff morale.

“The review should be demonstrably independent, all findings of the review should be published, and the Committee will expect to take evidence from the reviewer,” Morgan added.

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