Letter from the Chairman to the Chief Ombudsman on application for certification under the Alternative Dispute Resolution (ADR) Directive

Published: 09/07/2015     Last Modified: 09/07/2015

Caroline Wayman
Chief Ombudsman & Chief Executive
Financial Ombudsman Service
Exchange Tower
1 Harbour Exchange
London
E14 9SR

Dear Caroline,

Application for certification under the Alternative Dispute Resolution (ADR) Directive

Thank you for your application to become a certified ADR entity and for the information that you provided in accordance with the Alternative Dispute Resolution (Competent Authorities and Information) Regulations 2015 (the ‘Regulations’). I understand that you have made minor amendments to the reasoned statement following publication of the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 but that these amendments are not material.

I am writing to confirm that, having reviewed the information you have provided, we are able to approve the application from the Financial Ombudsman Service (ombudsman service) to become an ADR entity under the Regulations.  

We are satisfied that the ombudsman service already meets the majority of the requirements set out in the Regulations, and this is reassuring. We understand that the ombudsman service does not currently meet two particular requirements but, based on the information provided, we are satisfied that the ombudsman service will do so within a reasonable period of time.  The two requirements are:

Effectiveness

6. The person-

(d) notifies the parties of the outcome of the alternative dispute resolution procedure within a period of 90 days from the date on which the person issues the notice under paragraph (c) except that, in the case of a highly complex dispute, the person may extend this period but must inform the parties of this extension and the expected length of time that it will need to conclude the alternative dispute resolution procedure.

Grounds to refuse to deal with a complaint  

14A. The decision [to refuse to deal] can be made at any time prior to the expiry of three weeks of the date upon which the person received the final submissions of the parties, but it cannot be made after the person has notified the parties … that it has received the complete complaint file.

You have told us that, based on current forecasting assumptions, the ombudsman service expects to be in a position to meet the 90-day requirement for all complaints (including PPI complaints) by July 2017 and that the service will keep its performance under close review. We understand that the ombudsman service is still receiving high volumes of PPI complaints but is working hard to reduce the backlog and look for improvements to improve the timeliness of case handling. This approach to implementation will also help to ensure that PPI complaints received after the ADR Directive comes into force on 9 July 2015 are not unfairly prioritised over complaints that were received before that date. Given the above, it is our view that two years is a reasonable period of time for you to meet this requirement. It would be helpful to receive regular updates on the progress you are making towards meeting this requirement and we would expect you to alert our Oversight Committee to any issues that might impact on your ability to meet it.

On the three week refusal to deal requirement, you have told us that you are currently updating your casework processes so you can embed this requirement and record the relevant data from 9 July onwards. You expect to be able to meet this requirement by the end of March 2016 for non-PPI disputes, and by July 2017 for all cases. We think that these proposed timescales for meeting this requirement are reasonable, given in particular the amendments to the ombudsman service’s dismissal grounds. You said the ombudsman service will keep its performance under close review and it would be helpful if you could update us towards the end of this year of the progress you have made towards meeting this requirement. As mentioned above, we would expect you to alert our Oversight Committee to any issues that arise that might impact on your ability to meet this requirement within two years.  

At the Oversight Committee meeting, we discussed the requirement to publish the information set out in Schedule 5 of the Regulations annually. You may also wish to consider updating stakeholders annually regarding the progress you have made towards complying with the three week and 90-day requirements referred to above.

Yours sincerely

John Griffith-Jones
Chairman

 

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