FOS under fire following Channel 4 documentary

The Financial Ombudsman Service (FOS) exists to resolve complaints between financial businesses and their customers. They oversee a huge range of financial matters, dealing with thousands of case a year. They are positioned as the ultimate authority regarding such matters, so you would expect the people acting as case handlers to be the absolute best of the best, with vast knowledge and expertise in their fields and a textbook knowledge of the products they are reviewing.

However, a recent documentary by Channel 4 would suggest this may not be the case. The programme, featuring a large amount of hidden camera filming and customer testimonies, showed a number of worrying occurrences. Case handlers relying on Google for product research, and an admittance that cases were being “churned out” to meet targets, particularly relating to PPI cases, paint the FOS in an unflattering light.

FOS, for their part, were quick to respond, claiming the documentary gave an unfair impression of them. At the same time they also announced an independent review of the concerns raised would be undertaken, suggestion that the documentary findings wouldn’t be completely dismissed.

The FOS is often open to criticism, as it deals with such a large amount, and variety, of cases consistency can be an issue and mistakes can be made. Claims that 500,000 cases may need reviewing is likely to be a wild over estimate- that is the total number of cases defended for PPI, and a number of those would have been correct to do so. The chief of the Ombudsman service has therefore stated that cases may only be considered if new evidence comes to light. This, naturally, doesn’t correlate with a number of customers who feel the outcomes of their cases were unfair.

A large amount of the documentary focused on PPI, but there were a number of findings which have impacts for other financial products. For SIPP’s, for example, the structures of any investments made can be very complex- can the adjudicator looking at this at FOS be trusted to be the expert in these matters? This is a potentially damaging documentary for the public trust in the FOS and how they respond to these allegations now will be paramount.

With MP Nicky Morgan also stating recently that the FOS has questions to answer, it’s clear this won’t just blow over for the FOS, and the issues raised will have to be addressed. The complexity, variety, and sheer volume of the cases they see shouldn’t be underestimated, but at the same time the demand on their resources will surely only increase, with the PPI deadline approaching and submitted cases expected to increase as a result, and the on-going issues around pension transfers, such as SIPP’s.

As a result, large scale root and branches upheaval of the FOS and its working practices would be seem highly unlikely. The evidence cannot be ignored however- training must clearly improve at the FOS, and re-reviews be looked at more readily, or they could find themselves in a similar position in a few years.


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