In a Dispatches undercover investigation of the Financial Ombudsman Service (FOS), current and former staff who judged cases admitted they received inadequate training, didn’t understand products and made decisions in favour of banks in order to ease their workloads and reach targets.

The damning revelations could pave the way for hundreds of thousands of cases to be looked at again.

The programme, which aired last night on Channel 4, revealed ‘big problems’ at the service, including ‘unachievable targets’, staff ‘just taking a chance and slinging stuff through’, not knowing ‘what to ask for’ when investigating complex cases and ‘googling products’.

‘Backlog of cases and mounting pressure’

A major backlog of cases were found to have built up in 2014/15, partly due to the level of PPI claims and if staff missed targets, their pay and promotion could suffer.

An insider told the undercover trainee investigator: “11,000 cases fell into a black hole. Two years later we find out they’ve not been looked at and we had to work our way through them all.

“Some post was two years old. There were cases saying ‘I am going to lose my house’.”

The undercover reporter was told there was pressure on staff to deal with caseloads fast, meaning they weren’t dealt with properly.

An investigator said: “You just can’t do it. Banking complaints are just horrid, having to work out what happened, it’s just not feasible – it really isn’t.”

Undercover reporter: “So – like – if you’re under pressure, you’re more likely to meet your targets if you’re not upholding them?”

Investigator: “Yeah, because you just need to make one call to the consumer, rather than trying to persuade the business, which is actually a lot harder.”

‘Fake case handling session’

In 2015, MP Rushanara Ali visited the FOS but Dispatches was told she was misled. Insiders said managers pre-selected and rehearsed cases to make the service look more professional.

Insider: “We ‘managed’ some of the visit to make the service look better than it was.

“There was a fake case handling session…to show that the adjudicators and ombudsman were working together.

“It was an executive attempt to hide the fact people did not know what they were doing.”

This testimony was relayed to the MP who said: “….If they tried to pre-cook or rehearse or inappropriately mislead me or any other visitor…I’d be very disappointed and would expect them to explain themselves.”

The FOS is answerable to the Treasury Select Committee and are accountable to parliament and the public.

Ali added: “…They are accountable to parliament, they are accountable to the public and they’ll need to explain themselves.

“…I would hope that our committee can call them back in and if necessary conduct an inquiry in to these allegations.”

‘Biased and unsympathetic’

Dispatches shared the evidence with former Pensions Minister, Baroness Ros Altmann and James Daley, director of consumer group Fairer Finance.

Altmann said: “I don’t see how anybody can think it’s acceptable that the people who are making those judgments don’t know the detail…it is crucial.”

Daley said: “That absolutely doesn’t seem right these are complicated products and any adjudicator or ombudsman that’s involved in cases, arbitrating in decisions needs to know that subject area inside out.”

Further, Altmann was shocked at the unsympathetic nature payday loan cases were dealt with.

On payday loans, seniors at FOS didn’t sound impartial:

Experienced investigator: “…Completely stupid, I don’t know why you’d do them anyway…you have to get statements – really boring expenditure statements.”

Ombudsman manager: “Yes, I never really got that far when I was doing payday loans – I wasn’t very sympathetic… you borrowed 100 quid, you were struggling what else were you going to do, where’s the problem – they’re called payday loans for a reason.”

Experienced investigator: “There’s only so sympathetic they can be, if you aren’t going to stop shopping in Selfridges.”

After watching the footage, Altmann said: “No account taken of the circumstances, perhaps the mental health of the person who is taking out that loan, or the way in which it was sold to them. I mean that is truly shocking and I would say utterly unacceptable.”

‘Unfair impression of us’

The FOS has now temporarily reduced targets and in response, gave the following statement: “The Dispatches programme on the work of the Financial Ombudsman Service gives an unfair impression of us. Our role is to investigate disputes between financial businesses and their customers – making impartial decisions based on what’s fair and reasonable in each individual case.

“Every day we make difficult judgement calls that affect people’s lives. Our people are committed to doing the right thing – and we’re determined to provide a fair and trustworthy service for our customers and the best support for our staff.

“Of course, it’s always important to know where improvements can be made. A review, overseen by the non-executive board, of the concerns raised in the programme will be undertaken.”

FOS added that for any customers concerned about a case with it, they can get in touch.

“You can contact your case handler directly or call us on 0300 123 9 123,”, it stated.