User satisfaction plummets as delays mount at the Financial Ombudsman Service

As users face mounting delays and disputes, the Financial Ombudsman Service (FOS) is witnessing a significant decline in user satisfaction. 

When regulated financial firms reject or ignore complaints, you have three options: give in, pursue a costly court case, or turn to the FOS.

This vital service has the authority to compel companies to address issues and pay compensation, all without any cost to you. 

However, recent data paints a concerning picture of mounting delays and disputes within the FOS. 

In this article, we explore the challenges faced by the FOS, its improvement plans, and the obstacles it must overcome.

Dissatisfaction and delays

Over the years, the FOS has experienced a noteworthy decrease in user satisfaction levels, as its own data demonstrates. 

In 2015-16, 75% of people rated the service positively, but the most recent comparable data from 2020-21 reveals a drop to 54%. 

Since 2021-22, the FOS has adopted new metrics to measure satisfaction among users whose complaints were upheld (88% satisfied) or not upheld (36% satisfied). However, these metrics aren't directly comparable with previous years. 

You could face a wait of several months for your case to be resolved. In 2021-22, only 20% of FOS cases were resolved within three months, marking the lowest rate in the service's history. Additionally, a mere 47% of cases reached resolution within six months, contributing to the growing dissatisfaction.

How long FOS cases take to be resolved

Uphold rates and case resolution

The uphold rate, which reflects the proportion of cases where the FOS found in favour of customers, has also experienced a decline. 

In the past five years, only approximately one third of cases were upheld, compared to a rate that fluctuated between 43% and 64% in the preceding decade.

This decline can be partly attributed to a reduction in complaints related to payment protection insurance (PPI). For instance, the FOS indicated that, without PPI cases, the uphold rate for 2013-14 would have been 37% instead of 58%. 

The current uphold rates of around one third align with similar schemes such as the Pensions Ombudsman.

Return of specialist case handlers

In 2015, the FOS replaced subject specialist teams with 'generalist' investigators. However, a 2018 investigation by Channel 4 Dispatches alleged inadequate training, limited understanding of financial products, and unrealistic targets among staff.

Following an independent review, recommendations were made to reconsider the value of expertise. Responding to these concerns, the FOS announced in December 2021 its plan to restructure teams, focusing on industry-specific areas. 

While it may take time for this shift back to specialisations to yield results, it's disconcerting that users of the FOS in 2021-22 frequently raised concerns about the 'adequacy of investigations'.

Complaints about the FOS are, however, rare, with just 1.9% of users complaining during that year.

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Can the FOS catch up?

The FOS has set ambitious goals to address the challenges it faces. From 1 April 2023, it aims to resolve 70% of cases within three months and 90% within six months for all new complaints received. However, meeting these targets may prove challenging.

The number of fraud cases brought to the FOS has increased by a fifth from 2021-22 to 2022-23, with over a third involving complex investment scams. 

Additionally, the FOS must navigate the new Consumer Duty rules implemented by the Financial Conduct Authority, support customers during the cost of living crisis, and grapple with tech companies entering the financial services sector.

A spokesperson for the FOS said: 'We offer a free and independent service for consumers to help them solve their financial disputes if they feel they have been poorly treated by businesses. We’re absolutely committed to providing a service which people can use with confidence, and which resolves their complaints fairly and efficiently.  This year we set ourselves the ambitious target of closing 90% of cases within six months, and we're already seeing progress - between January and March 2023 the average case took 3.4 months to resolve. And we did this whilst maintaining the quality of our decisions.'

The FOS told us it will report on progress and further insights in six months.

How to get a financial dispute resolved

1. Contact the financial firm as soon as you are aware of the problem.
2. You can escalate the complaint by contacting the customer service department in writing. Keep records of communication and allow the firm 15 business days to respond if your complaint was about payment services (or up to eight weeks for other complaints).
3. If the firm rejects your complaint or doesn't respond in time, contact the FOS. Lodge a complaint through the FOS website or call the helpline (0800 023 4567 or 0300 123 9123).
4. The FOS will investigate your complaint. Depending on the type of complaint, this may take several months and you may have to supply more information, although many businesses will change their decision after being contacted by the FOS.
5. You can either accept the FOS verdict or take your complaint to court (but not both).

This article was updated on 21 July 2023 to include a quote from the Financial Ombudsman Service.