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  • Robert Bell

Importance Of Using FOS Decisions To Improve Your Service

At the end of July, the Financial Conduct Authority announced its finalised plans for the Consumer Duty, an important component of the regulator’s transformation into a “more assertive and data led regulator.” The Duty puts the onus on firms to understand what good outcomes look like for their own customers, and to test and assess how well they meet these outcomes. While this should mean that there are fewer changes to regulatory rules in future, the departure from the form of regulation the industry has been used to for the past decade could feel a bit like whiplash.


The FCA’s Business Plan sheds more light on how the Regulator plans to move the industry towards proactive compliance. “Putting Consumers’ needs first” is the first aim in its second focus – setting and testing higher standards. The importance the regulator places on this focus is no surprise and almost every metric is linked to the Principle, rules and outcomes of the Consumer Duty.

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The Business Plan then, helpfully, provides a window into how the FCA expects firms to be working towards embedding the Duty in practice. A key outcome in this “putting consumers’ needs first” category is that ‘consumers are sold products and services that are designed to meet their needs and characteristics.’ The FCA will measure progress on this aim through observation of upheld Financial Ombudsman Service complaints about unsuitable advice and mis-sold products and services. The FCA will also keep a close watch on how well firms provide consumers with good customer support through observing whether there is a reduction in upheld FOS complaints about customer service, account access or terminations, account closure and cancellation of policies.


The Dispute Resolution Handbook – the financial services complaints bible – offers guidance that complaints procedures should “ensure that lessons learned as a result of determinations by the Ombudsman [the FOS] are effectively applied in future complaint handling.” While this is guidance rather than a hard and fast rule, the Business Plan shows that this practice is likely to be a key exercise in both embedding and demonstrating compliance with the new Duty.


Using FOS determinations to review and amend process and practice is a relatively simple way of being able to provide hard and fast evidence of ensuring good customer outcomes. The key is evidencing how FOS determinations have been understood, analysed, and then used to make changes to improve service.


The FOS recently published information on complaints that involve gambling-related harm. The Ombudsman says that gambling is enjoyed by many people but can become a problem if it becomes an uncontrollable habit or addiction, and the potential for harm to the individual’s financial, physical and mental well-being is huge. The implications for firms that offer credit are clear in the Case Studies.


In analysing their complaints, the FOS note that the majority of complaints are from individuals that think the firm could have stepped in more quickly or done more to help. Many of the complaints focus on affordability issues, something that firms should be picking up on anyway, but will become even more critical after 31 July 2023.


The Case Studies offer even more illumination. In one case, a customer had been sold a guarantor loan but had debts with other lenders, owed money to a colleague, and was gambling heavily. The customer approached the FOS, claiming that the lender had lent irresponsibly. The lender disagreed, saying it had carried out an affordability assessment that relied on the information the customer provided. On investigation, the FOS found that the lender had obtained the customers’ income and expenditure information and a copy of the credit report. Although the I&E reflected that the customer would be able to repay comfortably, the credit file showed several accounts already in arrears, including a mortgage. The FOS found that it would have been proportionate to carry out further checks given the adverse information on the credit file, offering the suggestion of requesting copies of the customer’s bank statements. This check would have showed that the customer had a separate bank account that he used for gambling and which would have showed that he was spending a large amount each month on a variety of online gambling sites.


Financial Ombudsman case studies can be used as effectively as decisions involving the firm directly. A sweep of the case studies can provide a clear basis for quality assurance, audits or more minor checks. The gambling-related harm Case Studies highlight a number of practices, omissions or process failures – particularly in lending – that the FOS confirms are examples of poor practice in lending to those who are clearly – and not so clearly – in financial difficulties.


Given the Consumer Duty’s focus on improving service delivery and ensuring good customer outcomes, this exercise is now more important than ever.

Our range of Consumer Duty resources, including free webinars and downloadable items including a roadmap, checklists, templates and more can be found here.

Our dedicated Financial Difficulties course takes learners through techniques that have been tried and tested, covers questioning skills, empathy and active listening, what to say, when to say it, and how to support customers.


Priced at just £20 per user, the courses are accessible at the delegate’s convenience and provide a certificate upon successful completion, allowing firms to track and record each user’s progress.


For large groups, we can offer several corporate packages: https://www.rbcompliance.co.uk/corporate-compliance-training



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