The Ombudsman speaks about Consumer Duty

Abby Thomas, Chief Ombudsman and Chief Executive at the Financial Ombudsman Service (“FOS”) spoke at the Financial Conduct Authority’s Consumer Duty: One Year On event on 31 July 2024.

The key takeaways for regulated firms from Ms Thomas’ presentation are as follows: 

1. The FOS is now regularly receiving complaints about firms that relate to things that have gone wrong since the Consumer Duty came into force in July 2023(“the Duty”), especially with regard to poor administration and poor customer service. And the requirements of the Duty have had an impact on the FOS’s assessment of the merits of complaints. 
2. Consumer Duty related complaints to the FOS often concern information provided by firms to customers that is not clear, confused the customer or was provided at the wrong time (for example when the firm was aware that the customer was in a distressed or vulnerable state for some reason). The Duty requires firms to communicate well with customers and ensure that their communications are likely to be understood so customers can make timely and properly informed financial decisions. 
3. It has been noted that all too often firms respond to customer complaints by relying on, and referring back to, their standard terms and conditions or information provided when the customer took out the product. Firms instead need to consider the root cause of the complaint. This also means that firms should take time to reconsider what went wrong, why and how to put things right. 
4. The focus of the Consumer Duty on the needs of vulnerable customers means that firms must not stick rigidly to standard practice where a customer’s situation is far from standard. An example was a complaint to the FOS about a bank which insisted that an infirm customer had to attend a branch to carry out a transaction without offering an explanation or considering an alternative arrangement. Firms need to focus on finding a solution for their customers, taking into account any specific circumstances relevant to the individua in question, rather than just explaining why they couldn’t do something and thinking about making reasonable adjustments for vulnerable customers is a very important part of the Duty.   
5. Complaint insight provided by the FOS to firms should help firms when they are designing a product or service. The complaint data provided by FOS can also help firms to rectify customer detriment, including paying compensation in appropriate circumstances, and this will help to demonstrate that firms are embedding Consumer Duty at every level of their organisation as well as reducing the number of complaints. 
6. Firms must take time to properly listen to, and understand, customer concerns. Good complaint handling can build trust and confidence in a firm, as well as in financial services more widely, and maintain relationships with customers.  
7. Senior staff at firms should step into their customers’ shoes and ask whether those customers have been treated in the way that they would expect to be treated. 

Garon Anthony, Financial Services CDR Partner, comments:

“One year on from the introduction of the Consumer Duty it is clear to see the very positive impact that the Duty is already having on both firms and customers.

“We continue to watch the response of firms in relation to the work by the FCA and the FOS to highlight and promote the Duty with keen interest. We note that the FCA will publish a grid of its forward-looking Consumer Duty work and will share further examples of good and poor practice, with a focus on the price and value outcome, with the industry. It has also promised a post-implementation review of the Consumer Duty in two years’ time.”

If you have any queries in relation to the FOS Consumer Duty, please do not hesitate to contact Garon Anthony or Jeremy Ladyman.