Out-Law Legal Update | 07 Apr 2017 | 12:08 pm | 3 min. read
PPI aspects of the plan
The FOS's prediction of 180,000 new PPI complaints in 2017/2018 is down from its original estimate of 250,000 in an earlier consultation. A claims management company told the Ombudsman, as part of the consultation, that its original estimate was too low, and that higher volumes of PPI claims should be expected. However, it is satisfied that the publication of FCA rules on PPI/'Plevin' complaints in March now brings greater certainty and it has been happy to publish the revised lower estimate. It still expects to resolve 280,000 more existing PPI complaints in the year ahead.
Although the exact impact of the new FCA PPI/'Plevin' rules is not known, the FOS has suggested that, for existing PPI complaints, it does not intend to pass these complaints back to firms for them to investigate the 'Plevin' aspect, despite acknowledging that this is what some firms would prefer. Rather, it wants to "work together" with firms to resolve these complaints. It also states that it will not publish details of the number of complaints upheld against a firm for Plevin complaints that are received prior to 29 August 2017 and resolved by 30 June 2018. This is possibly an incentive for firms to address these types of complaints more quickly.
'Plevin' complaints relate to the Supreme Court's decision in the Plevin case in 2014 and FCA final rules and guidance on how firms should handle so-called 'Plevin' complaints, which may give consumers new grounds to complain about the sale of a PPI policy. As proposed by the FCA last year, firms have been advised that failure to disclose commission of 50% or more on a PPI policy sale should be presumed unfair, and any commission over this 'tipping point' should be repaid to the consumer. From 29 August 2017, firms will be required to write out to those whose PPI complaints were previously rejected, but who are now eligible to complain because of Plevin.
Apart from PPI complaints, the FOS expects 150,000 other new complaints in the year ahead of which only 37,000 are forecast for insurance matters. Banking and credit issues make up the majority of other complaints. It does not express concern about any particular new issue on the horizon that might generate increased levels of complaints – it says that it has not been the anticipated spike in pensions' freedom complaints. However stakeholders to the consultation did address several areas where the Ombudsman may see an increase in its future workload including pensions and annuities; "problems arising from new legislation around money laundering and payment services, fees and charges, fraud, hire purchase, and pension transfers and drawdown".
There is a strong focus in the plan on the continued quick, informal and flexible resolution of complaints. The Ombudsman expects to resolve 50% of complaints, excluding PPI, within 45 days by the end of the financial year. Flexibility is also the theme of its most recent newsletter and firms should take note that the Ombudsman is keen to see pace and responsiveness in response to complaints. Chief ombudsman Caroline Wayman said: "We’re now often able to unravel and resolve problems in a matter of days or even hours. That’s good news for someone with concerns about their current account – and potentially life-changing for someone in serious mortgage arrears".
There have been calls for the Ombudsman to change its funding model and reduce case fees for those complaints that are resolved more quickly however no changes are being made. Instead, individual case fees have been frozen at £550 and the 25 "free case" allowance remains in place meaning nine out of ten businesses that deal with FOS will not have to pay case fees at all. Given its comments in the plan, the FOS is not likely to change this case fee structure without careful consideration.
The FOS published its Plan for the 2017/2018 year ahead at the end of March following a public consultation it carried out between 14 December 2016 and 31 January 2017. The Plan deals generally with the Ombudsman's service, its customers, its reach and its people as well as dealing with future funding and budgetary issues. It also provides an overview of the responses received from a number of stakeholders that took part in the consultation including Aviva, Barclays Bank, Direct Line Group, HSBC, RBS, Santander and Standard Life. The FOS was "set up by parliament to resolve individual complaints between financial businesses and their customers – fairly, reasonably, quickly and as informally as possible".