| introduction |
| 3.1
|
Our
activities during the year have concentrated on preparing for N2.
Although the Financial Ombudsman Service has been operating to all
intents and purposes as one entity, in reality it has operated under
service level agreements on behalf of the existing schemes. At N2,
these arrangements fell away and the Financial Ombudsman Service
now operates under its own statutory powers.
|
| 3.2 |
The
key activities of the year so far have been as follows:
|
| 3.3
|
achievement
of targets During a year that has seen considerable challenges with
the introduction of our new casework system and business process,
and the change associated with N2, we are on target to meet our anticipated
number of case closures and our budget for the unit cost. |
| 3.4
|
preparations
for N2, including the harmonisation of ombudsman policy
Previously the ombudsmen within the Financial Ombudsman Service
operated using different sets of rules, depending on the scheme
to which an individual complaint related. Our panel of ombudsmen
have met regularly to discuss issues that will arise after N2 and
ensure that decisions will be consistent, fair and reasonable across
the Financial Ombudsman Service.
|
| 3.5
|
finalisation
of new eligibility, process and funding rules
In conjunction with the FSA, we have already consulted on draft funding
rules and these rules have been published in ‘virtual final’
form. Rules covering internal complaints-handling procedures, jurisdiction,
and investigation procedures have also been made, after consultation
with the industry. HM Treasury has made rules relating to transitional
arrangements, which extend the scope of our powers to include complaints
about pre-N2 business. This will enable us to have a ‘seamless’
transfer between the old schemes and the new service. Without this,
the situation would have been complex, and confusing for consumers. |
| 3.6
|
close
co-operation with the FSA on mortgage endowment redress policy
Following the FSA’s publication of its regulatory guidance on
mortgage endowment complaints, we published an assessment guide detailing
the new procedures and the tools we use when considering mortgage
endowment complaints. This guide not only helps speed up the process
for the cases we deal with, it also enables firms to understand our
approach and the amount of compensation we may award, making it easier
for them to settle cases satisfactorily themselves, without the need
for our involvement. |
| 3.7
|
a
pre-N2 focus on communication with the industry, including the publication
of ombudsman news
Our aim as far as the industry is concerned has been to ensure N2
brought no surprises. To help firms and consumer bodies fully understand
the changes coming at N2, we organised training events, workshops
and seminars. We produced a range of technical briefing notes and
updates and helped firms distribute over 1.5 million copies of our
new complaints leaflets. In addition, we launched a monthly publication,
ombudsman news, containing case studies and commentaries on topical
subjects. |
| 3.8
|
the
introduction of our new business process and case-handling system
Our new unified case-handling system was implemented on time and within
budget during the summer of 2001. At the same time, we introduced
a new, consistent business process across the case-handling divisions,
enabling us to improve our productivity and service quality levels.
It will also give us the flexibility to move staff across divisions,
where necessary, if there are changes in the balance of the workload.
|
| 3.9
|
an
emphasis on complaint prevention
Our technical advice desk now deals with around 400 calls a week,
mostly from professional complaint- handlers in firms. Firms report
that the advice we provide enables them to resolve many complaints
themselves, without the need for our direct involvement. In addition,
staff in our customer contact division (the division that deals with
customers’ initial telephone calls or letters) do not simply
answer enquiries and process complaints. They actively seek opportunities
to resolve disputes at this early stage. Where this can be done, we
avoid the need to pass on the complaints to our case-handling divisions
for investigation. This helps reduce costs for firms and for ourselves.
|
| summary
of workload |
| 3.10 |
A summary of current forecast workload is as follows: |
| |
|
2000/01
Actual
|
2001/02
Budget
|
2001/02
Forecast
|
| Cases
at 1 April |
11,800
|
15,300
|
14,700
|
| New
cases |
31,300
|
38,000
|
38,000
|
Closed cases |
28,400
|
38,500
|
38,500
|
| Cases
at 31 March |
14,700
|
14,800
|
14,200
|
| No
of weeks’ work outstanding |
20
|
22
|
20
|
| Productivity
|
*
3.3
|
3.5
|
3.7
|
*
Productivity is defined as the number of cases closed per case-handler
per week
|
| 3.11
|
At
the end of November 2001, the number of new cases was 29% higher,
on a comparable basis, than in the previous year. This rate of increase
over last year is unlikely to continue for the rest of the year; there
was a sharp increase in new cases in the second half of last year,
which has now flattened off. |
| 3.12
|
If
we simply extrapolate the current average weekly new case figure for
the balance of the year, we come to a full year figure of around 39,000.
However, we are seeing a slowing down in the rate of increase in new
cases. Our current best estimate is therefore in line with the original
forecast figure of 38,000, which we gave in last year’s Plan
& Budget. |
| 3.13 |
At
the end of November 2001, our cumulative case closure figure was 24,900.
This averages at just over 700 a week. However, this period includes
the introduction of the new case handling system. If we just look
at the 10 weeks from the beginning of October 2001, the average weekly
closure rate has been around 780, representing a productivity rate
of around 3.8 cases per case-handler each week. This compares with
the average productivity rate last year of around 3.3 and signifies
an excellent recovery rate so soon after the introduction of the new
process and system. |
| 3.14
|
At
current levels, we should achieve a closure figure in the range of
37,500 to 38,500. Clearly, if the level of new cases falls sharply
in the last quarter of the year, there may be a constraint on the
number of cases that can be closed. |
| 3.15
|
As
far as timeliness is concerned, our target in 2001/02 is to complete
70% of cases within six months of the date when we formally accepted
them as eligible cases. At present, we are exceeding this target –
completing 73% of cases within this timescale. However it must be
borne in mind that the closure time is also affected by factors outside
our control, for example, awaiting replies from consumers, member
firms, or technical experts. |
| 3.16
|
The
approved 2001/02 operating cost budget for the Financial Ombudsman
Service (before financing) was £26.5m. We expect costs for 2001/02
to be in line with this budget. A summary is set out in appendix D. |
| 3.17
|
The
target unit cost for 2001/02 was £688 (operating costs divided
by case closures). At present we are still on course to achieve this
figure. If there were a sharp falling away of new cases in the last
few months of the year, that could result in our failing to attain
this target. |
| |
A summary
of the current forecast for 2001/02 is as follows:
| |
Half
Year £m
|
Budget
£m
|
Forecast
£m
|
| Operating
costs |
12.9
|
26.5
|
26.5
|
| Financing
costs |
0.4
|
1.1
|
1.1
|
| Total
costs |
13.3
|
27.6
|
27.6
|
| Case
closures |
|
38,500
|
38,500
|
| Unit
cost* |
|
£688
|
£688
|
*Unit cost is calculated before financing charges
|
| 3.18
|
If
new cases fell away sharply in the final quarter, we would seek
to
make short-term savings in order to get as close as possible to
the target of £688.
|
| |
|
| conclusion |
| 3.19
|
In
both our process and our decisions, we have tried to balance the importance
of speedier complaint-resolution with the need to provide a quality
service. With the aim of achieving this, we have slightly
reduced the rate of increase in our productivity and timeliness targets
for 2002/03.
|
