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FOS launches independent review following Channel 4 exposé

The Financial Ombudsman Service will be reviewed by an independent person following claims of poor staff training and alleged biases in its decisions that were exposed in a recent Channel 4 investigation.

Treasury Committee chair Nicky Morgan wrote to FOS chief executive Caroline Wayman (pictured) on 13 March asking for more information about the findings of the Dispatches report.

In her 20 March response, Wayman says the FOS has appointed an independent person to conduct a review.

In a statement, Morgan says: “The independent review must consider the FOS’s approach to decision-making, the assurance process, and the causes of low staff morale. The committee will want sight of the terms of reference before they are finalised.”

She says: “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.”

In the undercover investigation, FOS employees said they used Google to find out what some financial products are and that, in some cases, the complainant had a greater level of knowledge than FOS staff.

In Morgan’s letter, she asked for responses to claims staff are given cases they are unqualified to work on and that the FOS has a bias to decide in favour of banks.

Wayman responds that all new case handlers that join the FOS are in the organisation’s “training academy” for six months.

There, the training includes law and regulation, product knowledge, evidence-gathering skills, understanding how the FOS works and the standards its requires.

Wayman says: “On joining the service, all new case handlers take part in a comprehensive training programme – including a session with me as chief ombudsman to talk about the role of the ombudsman service and the values of independence, impartiality and fairness that are at the heart of what we do.”

On the bias claims, Wayman says that, depending on the product, the business involved and when and how things happened, its published uphold rates range from around 10 per cent to 90 per cent.

In her letter, Morgan also asks for an approximate number of people who have been impacted by poor case handling and errors. The Dispatches programme claimed there were 500,000 payment protection insurance complaints that needed to be relooked at.

Wayman says: “The 500,000 figure given in the programme appears to represent essentially every PPI complaint that hasn’t been upheld.”

She says that since 2010/11 the FOS upheld 923,656 PPI complaints in total, and did not uphold 495,877.

Wayman adds: “We are required by law to look at the individual circumstances of each complaint and it is not the case that every PPI product was inappropriate for every consumer – reflected in the complaints-led approach to PPI redress route taken by the regulator.”

Morgan also asked what evidence there is to assure parliament that the problems identified in the Dispatches investigation have not led to poor decision making at the FOS.

In response, Wayman says the FOS has a well-established “quality assurance framework”.

Wayman says: “As a body established under statute, as an alternative to the courts, providing finality in dispute resolution is an important principle for the ombudsman service. The circumstances in which we can reconsider a complaint are extremely limited.”

She adds: “We may, however, consider the matter afresh if material new evidence subsequently becomes available which the ombudsman considers likely to affect the outcome. And as a public body, our decision-making is of course subject to judicial review – which means our decisions come under scrutiny by the courts.”

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