Walter Merricks told me at the end of June saying that he was moving on after 13 years an Ombudsman – 10 at the Financial Services Ombudsman Service and 3 before that as the Insurance Ombudsman. He is going to do adjudication in the Health Professions which is no doubt important but is not enough I would have thought to keep Walter engaged and interested.
We look forward to the book and indeed the spin-off TV series – why not some reality TV with Walter as the judge in a consumer small claims court televised live. Walter was always a bit of a thesp – a star of TV and before that he trod the boards in student drama with perhaps his finest hour as a member of the cast of the original 1966 Edinburgh Festival Fringe Oxford Theatre group production of Rosencrantz and Guildenstern.
Surprised by another record breaking year
In his final Annual Review Walter points out how wrong he and his team had been in their expectation that complaints would fall in 2008/9 (after the big boom associated with endowment mortgages died away). 2007/8 had been a record year but 2008/9 saw even higher figures. That may not be a surprise with all the crashes and crunches of recent times in financial services but what is disappointing is that almost 6 out of 10 were justified. This is an increase in the proportion upheld in the past which ran fairly steadily at 30-40%. It would seem that business is not ready to use its complaints data to learn lessons and avoid repeating the same mistakes – and the chances of these mistakes becoming public are increasing.
The impact of claims management companies
The chances of companies getting away with it are lessening as the activities of claims management companies grow in parallel with changes in consumer complaint behaviour. Walter has been grappling with the question of why consumers should use these companies and pay them a hefty chunk of any winnings when the Ombudsman service is free? Lazy? Frightened? Too busy? Whatever the reason consumers have for using these companies, the prospect of profits gives these companies the energy to dig up and expose lots of cases involving ‘legacy-issues’ that can severely dent profitability if companies have made no provision for such cases. Remember that if in retrospect it becomes clear that a business has broken FSA rules, then all the customers who have been disadvantaged by that breach have to be given redress whether or not they have bothered to complain.
Over half the complaints received about payment-protection insurance (PPI) were sent in to the Ombudsman from claims management companies and a very high proportion of the cases were upheld by the FOS. So the claims companies are doing good for their customers. The consumer who would otherwise have got nothing still gets something even after paying the claims companies’ costs.
Collective Action – one idea for reform
Reform is needed with Walter listing the objectives of any reform as well as citing proposals of great current interest to governments and regulators that would allow a collective claim to be made on behalf of all consumers adversely affected without them having to make an individual claim. This should achieve two aims – redress for individuals who have suffered and speedier market improvement action because the size and nature of the problem have been identified earlier than would have been the case with complaints brought by individuals being tracked and aggregated over time.
Just a few weeks ago, we blogged about Richard Thomas throwing off his crusader cape as the Information Commissioner and now Walter is handing in his SuperOmbuds costume. Last week I attended a leaving party for Allan Asher ex-head of Energywatch and chair of the BSI’s Consumer and Public Interest network just before he headed back to Australia. Ou sont les consumer heroes d’antan? More to the point. ou sont les consumer heroes d’avenir?
If you know of any, we would be interested to hear who they are.