I do support the increase proposed but only if FOS

• introduces an appeals procedure
• makes greater efforts to check the validity of a firm's calculations
• appoints special staff to handle such high value cases

FOS has no appeals process
Under current rules FOS decisions are made by Adjudicators and Ombudsmen, who have the final and absolute right to decide what is wrong and what is right. This is not a good arrangement under the present limit but a decision involving £150,000 taken by a single individual must surely have an appeals process.

There is no independent appeal against an FOS decision but contrarily, if a complaint is made about FOS "service standards", the complainant can appeal to a Casework Manager and further, to the Independent Assessor.

FOS say that when a case is reviewed by an Ombudsman, this is regarded as an appeal, but this is much too cosy an arrangement between staff who work together. In instances where a case is passed to an Ombudsman because the Adjudicator cannot properly grasp the issues, then this cannot possibly be regarded as an appeal since only one competent person (the Ombudsman) has assessed the case and no second review has taken place of his decision.

More cases are being referred to Ombudsmen so it seems likely that consumers are growing more dissatisfied with the Adjudicators.

Furthermore the quality of Ombudsmen's so called 'appeals' is questionable. In her 2004 review of the FOS Professor Elaine Kempson ( now an FOS Board member) stated:
"In larger case files, adjudicators flag the key documents and correspondence for the ombudsmen."
So it seems that Ombudsmen expect (and get) guidance on what the Adjudicators regard as most important issues . No meaningful appeal can take place unless the person reviewing the case makes an independent assessment of all the issues.

The lack of appeal affects both consumers and firms, especially small firms and IFAs. An ill-considered decision made by an Ombudsman (who probably does not have IFA qualifications), can be accepted by the claimant and then becomes binding on the firm with no right of appeal. A small IFA can have his business, career (and life) ruined at a stroke by a flawed decision made by a single individual. Last year 166,000 cases were decided by FOS. There must have been some mistakes and I can think of no other area in public affairs where decisions involving up to £100,000 (let alone £150,000) can be taken by a single individual without the right of appeal. FOS Adjudicators and Ombudsmen are not infallible and the FSA should recognise that.

FOS does not check a firm's calculations

It is difficult to believe, but FOS does not usually calculate redress payments or even check the calculations to establish whether a firm's offer is reasonable.

The FOS does not generally check a firm's calculations if they make an offer to pay redress. FOS says they will put a consumer back where they would have been if the firm had not made the mistake, but this requires a particular redress figure which depends on the facts of the case, not on the firm's willingness to offer redress or not.

There must be a possibility that some firms may make a low offer in the knowledge that it will be waved through, indeed the whole question of how an Ombudsman can assess a firm's offer as "fair and reasonable" when he has not actually checked the figures throws doubt on the credibility of the whole FOS process.

Even when FOS directs a firm to pay redress in accordance with a formula, it does not require the calculated payment to be passed back to FOS for checking.

Surely FSA cannot permit payments of £150,000 which have not had the firm's calculations checked properly.

Staff may not be adequately qualified for complex cases
In Summer 2010 FOS staff levels had reached about 1600 with around 600 new staff joining in a single year and further recruitment taking place. 25% are outsourced contractors. This means a huge rate of expansion, or a huge staff turnover but whatever the reason, in 2010 there were hundreds of new staff with low experience levels and this, combined with the FOS policy of paying around 900 Adjudicators incentives (bonuses) to meet case closure targets, must impact on quality.

I am concerned that some Ombudsmen and Adjudicators may not have appropriate experience and/or qualifications for much of the work they are doing now, let alone for more complex cases of up to £150,000. A recent advertisement for Ombudsmen did not require any minimum financial qualifications and the salary level offered to Adjudicators recently for a nine month fixed term is unlikely to attract the best candidates away from the attractions, salary and long term career structure of London's city and financial world. New graduate Adjudicators on £21,000 pa are likely to be on their first real job with little life experience of pensions, mortgages or the complex financial products likely to produce awards of £150,000.

Money Marketing magazine recently asked FOS to reveal the qualifications of Adjudicators but FOS declined this opportunity to address concerns about staff quality. FSA apparently did cooperate with the magazine.

If the award level is to rise, FOS must set up a specific cadre of highly qualified and competent Ombudsmen (not Adjudicators) who will handle such cases.

Yes I do agree with this.

In particular I agree with consultation para 3.10 which suggest that some firms deal with matters in a less than satisfactory way initially, hoping that the complainant will not take the matter forward to FOS, or the Courts. I have experience of this personally where an initial award stated to be 'final' by the firm was substantially increased as a result of my perseverance. Anything which may persuade the firms to make their realistic final offers from the outset is a good thing.

However, I must draw attention again to the FOS policy of not checking the calculations provided by firms. Even if the removal of the two stage process results in more satisfactory initial response by the firms, it will still not work properly if firms know in advance that FOS are not going to check their offers. This must surely encourage some firms to may a low offer in the knowledge that the complainant will not be able to check it properly (through lack of knowledge) and the FOS will probably not check it as a matter of policy.

FOS is quite open about this policy, which has been the subject of press comment recently and the Independent Assessor and the last Service Review Manager confirmed to me that the policy exists.

In my case I formed the impression that the firm wanted me to go to FOS, they knew their offer would not be checked, there would be no adverse publicity or criticism and they would probably avoid court proceedings.

Yes I do agree with this, but I would suggest that the guidance to complaint handlers should include decisions made by Adjudicators as well as Ombudsmen.

FOS is planning for a caseload of 200,000 complaints in the current year and the vast majority of these cases will be decided by the 900 or so adjudicators rather than the 80 or so Ombudsmen. Leaving out the Adjudicators' decisions means that 90% of what happens at FOS will be left out of the guidance to complaint handlers. Surely this is not the intention.