Streamlined process implemented by FOS to clear complaint backlog driven by the pandemic

The Financial Ombudsman Service (FOS) has decided to implement its proposals to resolve complaints more quickly and tackle the accumulation of cases during the Covid-19 pandemic, following a short consultation period and support from the majority of those who responded.

The FOS launched (4 October 2021) its consultation to make temporary changes to reporting the outcomes of proactively settled complaints, in an aim to clear the backlog of complaints made during the Covid-19 pandemic. Following the consultation, the FOS has determined (1 November 2021) to proceed with implementing that proposal.  

Moving complaints forward

The development comes as the FOS looks to engage with businesses differently to move complaints forward. For some firms, the ombudsman has taken a preliminary look at batches of cases and come to some indications of possible outcomes to see if they might be acceptable to the firm. If they are acceptable, then the cases can be settled without appointing an investigator and going through the full adjudication process. If, however, the firm disagrees with these indications of possible outcomes, then the full adjudication process remains available.     
 
The ombudsman's new approach is that, for a limited period of time, when firms settle their complaints proactively and pragmatically, then those complaints will not be published as "upholds" but reported separately. 

The new proposals will apply to existing complaints in which the FOS has not issued its opinion (defined as "a written communication with both parties, that expresses a view on the fairness of an outcome, and that provides ombudsman referral rights") by a defined cut-off date – this has now been confirmed as 31 October 2021 – that are proactively resolved on or before 31 March 2022. The FOS will be sending a list of in-scope cases to firms during the course of this week.  

The key change that has been made as a result of the consultation is that, rather than presenting proactive offers from businesses "neutrally" to customers, the FOS will review the fairness and reasonableness of any offer communicated through this process before putting the offer to the customer. The FOS has also confirmed that, where it considers the offer was fair, the case will be recorded separately, and not as an "uphold" – even if the customer declines to accept the offer and the ombudsman proceeds to investigate the complaint.  

Osborne Clarke comment

The FOS has now formalised, for a temporary period, what it has been doing on an informal basis: namely, providing some indications of possible outcomes for complaints (what it described as "providing context about [the firm's] open stock of complaints") and giving firms the opportunity to come to a pragmatic resolution.  

Although some firms considered the approach controversial – given that they will already have considered the complaint and determined it should not be upheld, so there would be no need to change that determination – the majority appear to have been supportive.

As we thought, in appropriate circumstances, firms might have commercial reasons for wanting to clear the backlog of cases being considered by the FOS in a more streamlined and efficient way, particularly if the redress to be paid is small; and, under this process, they would be able to do so with the added benefit of such cases not being added to the firm's "upholds" data.  

This should also benefit consumers by getting their complaints resolved and, therefore, receive any compensation to be offered more quickly. The primary beneficiary, of course, remains the FOS, as this process will allow it to clear the backlog of cases on its books, while still (as it has now confirmed) charging firms the full case fees.