" The independent review must consider the FOS’ approach to decision-making, the assurance process, and the causes of low staff morale. "
The programme's investigation claimed that "staff with inadequate training or understanding of financial products are judging cases, with some having reached decisions in favour of the banks, without properly reading case files".
Following the Dispatches investigation Nicky Morgan, chair of the Treasury Committee, wrote to Wayman about the claims.
In her response, Wayman said that the circumstances in which FOS can reconsider a complaint are "extremely limited", but that it may reconsider cases "if material new evidence subsequently becomes available which the ombudsman considers likely to affect the outcome".
Wayman stressed that FOS has a "well-established quality assurance framework" which includes undertaking several thousand checks on cases every month as well as detailed file review sessions with its executive team and non-executive board.
Discussing potential bias in favour of banks, Wayman noted that "in any dispute resolution mechanism there is always a risk of potential bias, one way or the other" but maintained that "independence and impartiality... is central to everything we do".
She said that uphold rates are often cited as a proxy for bias, but said that they vary widely from around 10% to 90% depending on the nature of the product, the business involved and when and how things happened.
Wayman highlighted areas of high uphold rates such as PPI, in which FOS has found against banks in around two thirds of cases. She said the programme's claim that 500,000 PPI complaints need to be looked at again was unrealistic and actually represents "essentially every PPI complaint that hasn’t been upheld". She said it simply isn't the case that every PPI product was inappropriate for every consumer.
Responding to staff training, Wayman said that on joining the service, all new case handlers take part in a comprehensive six month training programme "including a session with me as chief ombudsman to talk about the role of the ombudsman service and the values of independence, impartiality and fairness that are at the heart of what we do".
Commenting on Wayman's response, Nicky Morgan said: “The Dispatches programme raised concerns about the FOS’s decision-making and governance. These have been echoed by correspondence received by the Committee from current and former FOS employees, who have also expressed dismay about poor culture and low morale.
“The FOS is essential in underpinning consumer confidence in the financial services industry, and in redressing the power imbalance between large financial institutions and their customers.
“It is troubling, therefore, that cases may not have been decided correctly. As Ms Wayman says, it’s right that cases be reopened if there is any new evidence that might affect the outcome. That must surely include failures in the FOS’ own processes.
“The independent review must consider the FOS’ approach to decision-making, the assurance process, and the causes of low staff morale. The Committee will want sight of the terms of reference before they are finalised. The review should be demonstrably independent, all findings of the review should be published, and the Committee will expect to take evidence from the reviewer.
“I shall be writing to Ms Wayman in due course to set out in more detail the Committee’s expectations of the review, and the Committee will consider whether further action is required in response to the correspondence it has received.”
