|
new
complaints
introduction
|
| 5.1
|
Our
working assumption for 2002/03 is that the overall number of new complaints
will be at a similar level to the current year. We have tested two
additional scenarios, one assuming the number of new cases will be
10% above that for the current year 2001/02 and another assuming it
will be 10% lower. A summary of the latest forecast and budget is
as follows: |
| |
| New
complaints |
2000/01
Actual
|
2001/02
Forecast
|
2002/03
Nil Growth
|
2002/03
Increasing Complaints
|
2002/03
Falling
Complaints
|
| Insurance |
6,559
|
7,000
|
7,600
|
8,400
|
6,900
|
| Banking
and loans |
6,153
|
6,500
|
7,000
|
7,750
|
6,300
|
| Investment
|
18,635
|
24,500
|
22,900
|
25,350
|
20,800
|
| Total
|
31,347
|
38,000
|
37,500
|
41,500
|
34,000
|
|
| 5.2 |
It
is difficult to predict the pattern of complaints. The last few weeks
of 2001 have seen a marginal slowdown in the number of complaints.
Whether this is a temporary blip or a continuing trend is hard to
judge at this stage. We summarise below the external and internal
factors which may determine the pattern of complaints. We also summarise
the current position on the Voluntary Jurisdiction. |
| 5.3
|
A number
of external factors can affect the level of complaints.
These include:
a) industry action
Firms may be more proactive in dealing with
complaints, resolving them successfully before the stage where they
would otherwise be referred to the ombudsman. Both we and the FSA
have been encouraging this approach. Our monthly publication, ombudsman
news, sets out our general approach to particular types
of cases and provides firms with useful guidelines. The FSA
complaint-handling rules that came into force at N2 should improve
industry standards.
b)
mortgage endowments
Firms’ actions in sending out re-projection letters will have
a critical effect on the level of new complaints in 2002/03. At
present, we are assuming some increase in complaints resulting from
re-projections in the first quarter of 2002.
c)
N2
We have always assumed that there will be some increase in
complaints from the publicity surrounding N2.
d) falling stock markets and investment returns
This may well lead to an increasing number of complaints. In particular,
it is likely that mortgage endowment re-projections will show larger
shortfalls.
|
| internal
factors |
| 5.4
|
There
are also internal factors that will influence the level of cases. |
| 5.5
|
new
business process
The staff in our customer contact division receive and screen complaints
before they become ‘cases’ (and therefore chargeable)
and are passed on to a case-handling division. We are training these
staff to resolve relatively straightforward complaints at the earliest
possible opportunity. This may help to reduce the future level of
chargeable cases.
|
| 5.6
|
new
eligibility rules
The new rules widen the scope of eligible complaints in a number
of respects. Many more firms come within our scope and new activities
(insurance of small businesses, and securities and share dealing)
come within an ombudsman scheme for the first time. This could have
an upward impact on case numbers.
|
| 5.7
|
new
rules definition of chargeable case
The main impact of the new case-fee arrangements will only be felt
from April 2002. Cases will become chargeable at a different (and
– by comparison with some former schemes – earlier) point
in the process. Our best estimate is that this will initially have
an upward impact, possibly followed by a decrease as firms get used
to the new arrangements. Some volatility is expected. |
| |
|
| voluntary
jurisdiction |
| 5.8
|
We
had expected to be extending the Voluntary Jurisdiction to new sectors
and had envisaged that this would have a business and financial impact
in the year 2002/03. However, in December 2001 HM Treasury announced
major policy decisions that will affect our plans. It is clear that
general insurance intermediaries and mortgage brokers will eventually
fall within our Compulsory Jurisdiction. Whether they may be brought
within the Voluntary Jurisdiction before then remains to be considered.
We had expected mortgage lenders to join the Compulsory Jurisdiction
in mid-2002 but it will now be delayed. However, our Voluntary Jurisdiction
is open to such lenders and we will welcome those who wish to join.
a)
consumer credit firms
We intend to discuss with trade associations
and regulators the possibility of consumer credit members joining
the Voluntary Jurisdiction.
b)
insurers and banks from the European Economic Area (EEA)
We have consulted on allowing EEA insurers and banks that sell into
the UK consumer market to join the Voluntary Jurisdiction. We expect
the immediate effect will be to allow five or six insurers, mainly
based in Ireland, to continue to be covered by the ombudsman service.
|
| consumer
contact division |
| 5.9
|
customer
contact division (CCD)
We expect
the number of consumers contacting us by telephone or letter to
rise by 11% this year. However, we expect the level of contact to
remain at a similar level next year.
| |
Actual
2000/01
|
Forecast
2001/02
|
Budget
2002/03
|
| Calls
to dedicated telephone lines in our customer contact division
|
221,000
|
250,000
|
250,000
|
| New
written complaints |
67,000
|
70,000
|
70,000
|
|
| 5.10
|
We
have made a considerable investment in skills training for our consumer
consultants and are beginning to see the benefits of this expenditure.
Our intention is to resolve as many complaints as possible in our
customer contact division, to avoid them becoming chargeable cases.
We are at present developing a range of key indicators to measure
our performance in this area. |
| |
|
| insurance
division |
| 5.11
|
insurance
division – analysis of new complaints |
| 5.12 |
The
increase in complaints has been reasonably stable over the last
few years.
|
| |
| |
2000/01
Actual
|
2001/02
Forecast
|
2002/03
Budget
|
%
Increase 200102 over 2000/01
|
%
Increase 2002/03 over 2001/02
|
| Motor |
1,989
|
1,800
|
1,900
|
(10)
|
6
|
| Buildings/contents
|
1,795
|
1,850
|
1,950
|
3
|
5
|
| Loan
protection |
711
|
750
|
850
|
5
|
13
|
| Travel
|
778
|
800
|
900
|
3
|
13
|
| Other |
1,286
|
1,800
|
2,000
|
40
|
11
|
| Total |
6,559
|
7,000
|
7,600
|
7
|
8
|
|
| |
|
| 5.13
|
The
expected reduction in the number of complaints involving motor insurance
reflects our intention to resolve more straightforward issues, such
as motor valuation, at the initial contact stage. We expect a slight
increase in loan protection complaints to reflect the probable increase
in claims during an economic slow down. Travel claims have been rising
for some time and the terrorist attacks in the USA are likely to exacerbate
the position.
|
| 5.14
|
The
increase in other complaints this year reflects mainly the inclusion,
for the first time, of critical illness and permanent health insurance
complaints – these will account for about 500 cases this year.
In addition, a growth in the number of people taking out medical expenses
policies has driven an increase in the number of complaints about
these policies. In 2002/03 we expect to see the first commercial disputes
coming forward for resolution. The impact of this is uncertain at
present but we have assumed that we will deal with no more than 400
cases on commercial disputes in the first year. |
| |
|
| banking
and loans division |
| 5.15
|
banking
& loans division – analysis of new complaints
|
|
2000/01
Actual
|
2001/02
Forecast
|
2002/03
Budget
|
% Increase
2001/02 over 2000/01
|
%
Increase
2002/03 over 2001/02
|
|
Current
accounts
|
793
|
1,050
|
1,040
|
32
|
(1)
|
|
Deposit/Savings
accounts
|
1,679
|
1,450
|
1,600
|
(14)
|
10
|
|
ISAs
|
0
|
30
|
40
|
–
|
33
|
|
Loans
secured on land
|
2,499
|
2,950
|
2,900
|
18
|
(2)
|
|
Other
loans
|
664
|
620
|
870
|
(7)
|
40
|
|
Other
|
518
|
400
|
550
|
(23)
|
38
|
|
Total
|
6,153
|
6,500
|
7,000
|
6
|
8
|
|
| 5.16
|
The
increase in the number of new complaints has begun to level off compared
with previous years. |
| 5.17
|
The
current year has so far seen a reduction in the number of complaints
about TESSAs, but this has been offset by complaints about dual
variable- rate mortgages and downgraded accounts. Individual Savings
Accounts (ISAs) have yet to be the source of a significant number
of complaints and the ISA complaints we do receive tend to involve
investment-based ISAs, so they are dealt with in our investment
division.
|
| 5.18
|
It
is possible that the new time limits relating to the transfer of
bank accounts will give rise to additional complaints.
|
| 5.19
|
Credit
unions will join the Financial Ombudsman Service from 1 July 2002,
which may produce additional complaints relating to deposit/ savings
accounts. We are forecasting that the number of mortgage complaints
will remain fairly stable.
|
| 5.20
|
Complaints
about ‘other loans’ are likely to increase, particularly
from small businesses, especially if there is a downturn in the
UK economy.
|
| |
|
| investment
division |
| 5.21 |
investment
division – analysis of new complaints
|
|
2000/01
Actual
|
2001/02
Forecast
|
2002/03
Budget
|
%
Percentage 2001/02
over 2000/01
|
%
Increase 2002/03 over 2001/02
|
| Mortgage
endowment |
9,067
|
13,900
|
12,400
|
53
|
(11)
|
| Endowment/whole
life |
3,363
|
2,400
|
2,400
|
(29)
|
0
|
| Personal
pensions |
2,545
|
4,800
|
4,500
|
89
|
(7)
|
| PEP/ISA
|
268
|
1,100
|
1,300
|
310
|
18
|
| Other
|
3,392
|
2,300
|
2,300
|
(32)
|
0
|
| Total
|
18,635
|
24,500
|
22,900
|
31
|
(7)
|
|
| 5.22
|
During
this year we have felt the full impact of the increase in complaints
relating to mortgage endowments which, at their peak, accounted for
approximately 60% of all new complaints. These complaints now account
for approximately 50% of all new complaints and we expect a further
reduction in 2002/03, as most firms have implemented procedures to
streamline their complaints-handling in accordance with the regulator’s
guidance. However, as mentioned earlier, the new round of re-projection
letters that firms will be issuing to policyholders this year is likely
to result in further complaints to the ombudsman.
|
| 5.23 |
Following
the House of Lords decision on the treatment of Equitable Life guaranteed
annuity rate (GAR) pension policies, we have seen an increase in complaints
from consumers with non-guaranteed policies from companies other than
Equitable Life, which have also sold
GAR policies. |
| 5.24
|
We
expect pension review complaints to continue at about the same
level as in 2001/02 and they are included with all other personal
pension complaints. |
| |
|
| conclusion |
| 5.25
|
Against
this uncertain background, we have decided simply to assume the similar
forecast figure as the current year. However, we have also assessed
the impact of two alternative scenarios – firstly, a higher growth
in new cases of 10%, and secondly, a reduction in new cases of 10%.
|
