Financial Services and Pensions Ombudsman Overview of Complaints 2023

The Financial Services and Pensions Ombudsman (FSPO) yesterday published its Overview of Complaints for 2023. This is the second publication from Liam Sloyan following his first full year as Financial Services and Pensions Ombudsman.

In his opening message, the Ombudsman notes a number of points of concern, whilst also addressing some of the issues which have attracted media attention in recent months.

Increase in Complaint Volumes

2023 saw a record number of 6,182 complaints received by the FSPO, representing a startling 29% increase on 2022. The increase is evident across all sectors with a 46% increase in Banking complaints, 28% in Insurance, 26% in Investments, and 44% in Pensions.

Customer Service remains the number one complaint issue for financial services customers, comprising 24% of all FSPO complaints. Banking again generated the highest number of complaints, with 3,850 complaints logged, representing 62% of the overall total.

“Customer service is again the conduct most complained of for the third year in a row. It is disappointing that many of the complaints received by this office continue to be of a nature that could be resolved earlier, without a need for our services.”

The Ombudsman recognises the requirement to extend the scale of their service offering in order to meet ever-growing demand. Reference is made to the Minister for Finance’s recent approval to increase workforce headcount from 90 to 128, with roles expected to be filled by September 2024.

Separately, the Ombudsman states that the level of complaint volume increase in a single year should be cause for reflection among financial service providers, with consideration to be given to additional measures that can be taken to reduce the FSPO complaint population.

Timeframe for Complaints Resolution

The Ombudsman again advocates strongly for both consumers and providers to engage fully with the dispute resolution process.

“It’s notable that since the introduction of mediation as the default complaint resolution method to resolve complaints, we have achieved considerable success in facilitating resolution … by agreement directly between providers and their customers…Typically, more than 70 per cent of complaints referred to mediation are successfully resolved through a mediation settlement or clarification of the complaint.”

In 2023, 85% of FSPO complaints were closed within 12 months, with an average of 7 months from receipt through to closure for non-tracker mortgage related cases, and an average of 8.6 months for tracker cases. These closures are generally occurring in early process stages, including dispute resolution or where cases are deemed to be outside of the FSPO’s jurisdiction.

While specific details are not referenced, cases progressing to the later stages of the FSPO process, including formal adjudication and the issuing of legally binding decisions, generally result in elongated timelines.

Issues of note

The Overview outlines a number of referrals of legally binding decisions from the FSPO to the Central Bank of Ireland (CBI), a regular practice between the two bodies when the complaint raises the possibility of a systemic issue which may warrant consideration by the regulatory authorities. Across 2023, these referrals included 3 cases relating to the Central Credit Register, 26 decisions concerning declined insurance claims for business interruption losses, and 107 tracker mortgage decisions.

The Overview also highlights the worrying increase in the number of fraud related complaints. The sophistication and variety of online scams and targeted financial fraud is expanding at an exponential rate. This was a key discussion topic for the Deputy Ombudsman, MaryRose McGovern, when she presented at Grant Thornton’s “Building Trust through Effective Complaint Management” event in November 2023. It was also a focus area within the CBI’s recent Consumer Protection Code Consultation Paper.?

On a positive note, the Ombudsman noted that complaints relating to the recent exit of two Irish retail banks have remained relatively low, primarily as a result of proactive stakeholder engagement.

Similarly, complaints related to the Tracker Mortgage Examination continue to trend downwards, with only 74 new complaints received in 2023, a 47% decrease on 2022. A significant number of existing Tracker complaints continue to be progressed through the FSPO process with 892 cases open and active at year end 2023. As the cases move to legally binding decisions, published outcomes are proving an invaluable resource for potential resolution to both consumers and providers.

It is significant to note that 103 tracker mortgage complaints were not upheld by the FSPO in 2023, with compensation directed on only 4 decisions, totalling an amount of €38,000.

Report on named Financial Service Providers

As per the Financial Services and Pensions Ombudsman Act 2017, the Overview includes a table identifying every regulated financial service provider which had at least three complaints upheld, substantially upheld, or partially upheld.

Complaint Outcomes

While the number of cases closed has increased from 2022, for the second year in a row the FSPO has received more complaints than they have closed (6,182 received vs 5,184 closed).

Of those closed, outcomes worth €4.7 million were delivered to consumers, with €2.9 million agreed through mediation, and €321,000 separately directed through 55 legally binding decisions. Across 33 other cases, a further €175,543 was noted as offered by providers and available to complainants – these cases were not upheld by the FSPO on this basis that these offered were considered fair and reasonable and no payment was directed by the Ombudsman. Am additional €1,271,754 was paid to 114 complainants by providers resolving the case in question before a decision was issued by the FSPO.

These figures reflect Grant Thornton’s approach to managing FSPO complaint management. Dispute Resolution presents an invaluable opportunity for customers and providers to resolve complaints quickly and mutually in an informal and confidential space with the assistance of an FSPO Dispute Resolution Officers. Our case managers have an in-depth knowledge of FSPO processes and procedures. Our team delivers a variety of solutions aimed at expediting the resolution of all cases, saving both time and operational cost.

Where feasible, cases should not be progressed through the FSPO process until all possible avenues have been exhausted. Formal Investigation creates further inconvenience for the customer and additional time and resources for the provider. In situations where cases have progressed, providers should still be seeking to resolve cases including where appropriate on-the-record settlement offers as resolutions can still be reached in the later stages of the process and legally binding decision can be avoided. Our experienced complaint professionals have successfully resolved cases at all stages of the FSPO process, including face-to-face mediations in Dispute Resolution as well as Formal Investigation and Adjudication.

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Author

Brian Duffy ACA ; Director, Advisory Consulting at Grant Thornton Ireland has over 20 years of financial services experience, and leads Grant Thornton’s Complaints and Remediation division. He has successfully delivered several large strategic programmes involving transactional, customer service, and product related complaints, managing the end-to-end journey efficiently and effectively. He also hosts Grant Thornton’s annual Complaints Event for industry leaders.

?He has built a skilled team of experienced complaints handlers and remediation/redress experts which offer a comprehensive offering across FSPO Complaint Handling, Resource Augmentation, Cohort Remediation, Root Cause Analysis, Vulnerable Customer Management, and MI/Reporting.