17 May 2017
Why companies fail at the FOS
In a world of fluctuating ratings, there is one statistic that has remained disappointingly steady over the past few years: companies lose cases at the Financial Ombudsman Service on average 33% of the time. That means one in three decisions by companies are being overturned. Some insurance and banking companies have even higher uphold rates in excess of 50%. Why is this happening and what can companies do to prevent this?
There are three common mistakes that companies make when cases are referred to FOS:
- Poor presentation
- Not picking up the phone
- Failing to check the FOS website
Let’s look at each one of these in turn.
There is a huge disparity between how companies present their case to FOS. Some companies simply submit their case file with a compliment slip, and some send in their file with a 30 page carefully-argued submission from a leading QC, with every variation in between.
Companies do not generally need to instruct a barrister in order to argue their case. However, simply letting the facts speak for themselves is a risky strategy. A final response should set out in detail why the company believes the complaint is not a valid one, with reference to the documents in the file. It should summarise the issues raised by the customer and address each of these in turn. Having a comprehensive final response certainly assists FOS in investigating the case.
But the case has usually moved on since then. By the very nature of making a complaint, the customer has shown that they disagree with the final response. The reasons for this disagreement are set out in the complaint form. So a company ought to address these grounds of disagreement in presenting its case to FOS. Inexplicably, some of them don’t.
In addition, a company’s case presentation should make reference to all the key documents. Tags or hyperlinks are very useful. Without making any reference to the documents in the file, the investigator is going to wonder why. Is there something in the file which support the customer’s case? It’s vital to show that each document in the file has been considered and no stone is left unturned.
Also, companies should consider providing a chronology with the submission. If there are a number of different dates and events involved in the dispute, then it makes FOS’s life easier to set these out in a document. This shows an understanding of the chronology of events and leaves no room for doubt or error on FOS’s part.
Finally, complaints handlers don’t often seek a second, expert opinion. Yet no one would dream of defending a case in court without the help of an expert lawyer drafting (or at least casting a professional eye over) the defence submissions. It’s important to consult someone with experience of dealing with FOS complaints. If there is no one internally with this expertise, companies should consider seeking external input. The presentation of the case can make or break the outcome, so it pays to get it right first time.
Not picking up the phone
Once the case is with FOS, it will be looked at by an investigator. Nowadays, the investigator will get straight on to the case without delay, and they are encouraged to resolve the case by the quickest possible means including by phone.
Companies should seize this opportunity to speak directly to investigator. Presenting the case in writing is fine, but it’s so much more powerful when explained personally. The investigator may have already spoken to the consumer who has passionately argued their case. Being able to speak to the investigator provides a chance to explain the company’s side of the story and put the key points forward. It also allows the company to answer questions and respond to feedback and arguments made by the investigator. If the investigator appears to disagree with the company’s position, it’s possible to offer to provide more evidence. Importantly, the company could ask more time to clarify their position before the investigator issues their opinion.
Not speaking to the investigator by phone is issued is a wasted opportunity and is very likely to hinder rather than help the case.
Failing to check FOS website
The FOS website has information about previous complaints which may assist a company in preparing its case. In particular, there are online technical notes and past decisions. It’s unlikely that FOS is going to reach a decision which conflicts with either of these resources. So it’s in a company’s interest to familiarize itself with FOS’s usual approach. If their position is inconsistent with FOS’s, then it needs to address this and explain why a different approach should be taken in this case. If possible, it’s a good idea to find decisions on the FOS database to help back up the company’s position.
Failing to check the FOS website is like presenting a case to court and not checking the law. The old adage, failing to prepare is preparing to fail, certainly holds true when it comes to presenting a case to FOS.
Melissa Collett was a Senior Ombudsman for 11 years, and now heads Fairer Finance's complaints advisory service.
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