The
role of the UK FOS Independent Assessor
A view based on my dealings with the Independent Assessor
and the FOS
Michael Barnes CBE until May 2010
Linda Costelloe-Baker OBE from June 2010
With a salary of £56,408
for an advertised two days a week, (equivalent to about £140,000
pa plus benefits, the post is clearly regarded as important
by FOS, but despite the rewards, the IA's duties and authority
are minimal. The job is to consider a small number of complaints
made about the 'standard of service' provided by the FOS and
provide reports on the findings. The IA's ruling on a complaint
is known as a "recommendation". The IA is specifically
not permitted to consider the merits of an Ombudsman or Adjudicator's
"decision", the IA's reports therefore have no relevance
to the FOS's main business of resolving financial complaints.
The IA deals with very few cases. In 2009/10 Mr Barnes tells
us that he considered less than 0.1% of FOS cases
(1 in 1000) and of these he upheld only 67 and made compensation
awards in only 60 cases. The compensation ranged from £50
to £1000 with one award of £1500.
In 2010/11 The IA considered 204 cases, upheld 122 of these
and made award between £25 and £750 in 94 cases
As well as making his awards the IA also prepares reports
for the FOS Board, but since Mr Barnes only considered service
standards in 1 in every 1000 FOS cases, it is difficult to
see what use his reports were. Indeed he confirmed this in
several Annual Reports, saying "care
should be taken in applying any conclusions drawn from my
work to the ombudsman service's work as a whole".
What use the FOS Board makes of these reports is uncertain.
For instance Mr Barnes drew attention to problems where FOS
does not calculate compensation awards but allows the businesses
to do it, however little seems to change, causing him to repeat
his warnings for several years. The FOS Chairman usually gives
the IA warm appreciation in his Annual report.
There is doubt about the actual independence of the Independent
Assessor. Mr Barnes was not appointed independently, but paid
and appointed by the FOS Board and he was actually an FOS
Board member until shortly before his appointment. Similarly,
Mrs Costelloe Baker, was not appointed independently, but
by the FOS Board who were assisted this time by what the FOS
website describes as an "independent public interest
observer". The role of this person is not known,
nor are their qualifications or experience, but presumably
as an "observer" he/she took no part in theselection.
The IA tells us the independent person was there to ensure
the process was "fair". The need to introduce
a token observer suggests the board must recognise problems
with the IA selection process.
On her own web site the IA explains
why she feels she is independent. But her explanation ( about
previous job titles, how she and her husband have not worked
in financial services and "independence of thought"
is not compelling ). She does not seem to realise that the
main worry is that she has been selected, appointed and paid
by the very organisation she is assessing, she probably also
receives the FOS fringe benefits/pension package, she works
in the FOS head office and shares staff with FOS executives.
She also has four meetings a year with the FOS Operations
Director and Corporate Director. This is too close a relationship,
as can be illustrated by my own experience:
Case
study, The Independent Assessor
I complained to Mr Michael Barnes, who had been in
post as Independent Assessor for 5 years and was well
aware of his terms of reference. He agreed there was
an issue requiring investigation and asked FOS to
look at it.
It took 4 months consideration, before
FOS decided they would not respond to
the main issue and Mr Barnes weakly accepted that.
He commented: "
I was initially optimistic that the FOS might have
been prepared to settle the matter to [Mrs xxx's]
and your satisfaction. However the
response I have received from the Principal Ombudsman
has left me in no doubt that FOS would not have accepted
any recommendation I might have made"
So the IA had not yet made
his recommendation, but the Principal Ombudsman
knew what it was going to be and had already
rejected it. The two of them had obviously
discussed the complaint (without including me) and
the reference to "any" recommendation
suggests that several options had been discussed.
Faced with this response from FOS, the IA decided
that he would not actually make a recommendation
regarding the real issue, but he would recommend
as a sop, a payment for "inconvenience".
Mr Barnes said "I understand
that the FOS are likely to agree with my recommendation"
so even this small award also seems to have been
discussed and settled in advance. This had two important
results:
-
It
permitted FOS to avoid actually answering the
complaint !
-
By
not making a recommendation the IA spared FOS
from the need to report the matter to the Board
with the possibility
(unless they over-ride their own Principal Ombudsman)
that they will also reject it. If this happens,
the whole matter has to be spelled out to the
public and the world, in the FOS Annual Report.
As an ex-board member Mr Barnes would have been
well aware of the implications of this washing
of dirty linen in public, with the associated
exposure of serious flaws in the FOS complaints
system. He will also have known that this would
have been the first time such a thing had ever
occurred. In the 10 years since FOS started, the
IA has always made recommendations acceptable
to FOS. He decided not to rock the boat.
All correspondence and
details of this case are in my possession
|
This example shows that, at the
very least, a dialogue about recommendations takes place between
the IA and FOS at a very high level, there does seem to have
been some negotiation over what might be acceptable to FOS.
One thing is certain, the example
above does not illustrate an Independent Assessor who treats
both sides equally, examines the facts independently,
makes his decision independently then, having made
his independent recommendation, informs both parties
of the result. At the very least, these issues raise
questions about the IA's comfortable relationship with the
Principal Ombudsman and illustrate why the ordinary man in
the street will have difficulty seeing the IA as independent
in the usual sense of the word. It appears the people the
IA is assessing can decline to be assessed and she can't do
anything about it. Is it surprising that some people think
the IA has little credibility.
This lack of independence has
been further illustrated by the saga of the IA's own website.
In late 2010 the FOS announced that the IA had her own web
site. www.independent-assessor.org.uk. This appears to be
written in the first person by the IA herself, but initially
contained a photo of her printed backwards. I cannot believe
that the IA (especially a woman concious of her appearance)
would deliberately allow such an embarrassing mistake so I
suspect that the FOS has published the web site itself rather
than the IA doing it independently. This view is further reinforced
by the six month delay before the mistake was corrected and
the fact that the website domain name is actually registered
to the FOS itself. None of this helps perceptions that the
IA is independent as she should be.
The IA's terms of reference have
remained unchanged for many years, but in late 2010, only
six months after the new IA's appointment, something happened
to cause the FOS to tighten them up. This major re-editing
of the rules does not actually change much, but the board
decided to spell out more clearly what the IA cannot
do. In an Orwellian move to further restrict the IA, the Board
have specified certain important items that she may not even
comment on. So if the IA should find that poor
service standards have affected the outcome of a case, for
instance if the Ombudsman has ignored FOS published guidelines
without good reason, or deliberately ignored some crucial
evidence, or not realised that a non taxable award has been
taxed...or whatever, the IA is not permitted to even comment
on this so the wrong award still stands even though
the IA knows it is wrong. I am surprised she is prepared
to accept the imposition of such a restriction.
In a further move to sideline
the IA, the FOS Annual Review for 2010-11 does not contain
the Independent Assessors's annual report. This is the first
time the IA's report has not been included in the annual review
for eight years and the change was discussed by the FOS Board,
though the reason for the change is not known. The IA's 2010-11
report appears tagged onto the end of the Annual Report after
15 pages of accounts.
To summarise, the IA's role seems
to consist largely of making a few small financial awards,
(or perhaps requiring an explanation or apology) in a very
small number of cases. The IA has no authority to do anything
else, and she is specifically instructed not to to comment
even if she notices a serious mistake by an Ombudsman. The
whole process is further diminished because the FOS is not
actually required to follow her recommendations. If FOS decline
to follow a recommendation all the IA can do is inform the
Board, but the Board don't have to follow the recommendation
either ! This is hardly a rigorous policing of FOS service
standards. She provides a second level of appeal about a tiny
number of "service" complaints, but the 166,312
consumers who turned to the FOS for help in 2009/10, had no
appeal at all about the standard of the actual decisions
they received.
I should emphasise that the Independent
Assessor changed in June 2010. Mrs Costelloe Baker has come
from outside the FOS and I hoped she would bring a breath
of fresh air. She was not involved in the example case described
above. Perhaps the new restrictions on comments introduced
after her arrival and the removal of her report from the annual
review, resulted from her daring to speak freely ?
Many aspects of the Independent Assessor's
role at FOS are worrying and I suggest the following ways
to improve the authority, independence and credibility of
the position. The whole role really requires a complete overhaul
if the IA is to have any authority or credibility, and I wonder
whether the position is really necessary at all.
Selection procedure
The appointment should be made by an independent body. Perhaps
the Treasury Select Committee or the National Audit Office,
or any suitable independent body, separate from FOS
and FSA. Certainly the IA should not be chosen or paid by
the FOS Board. Nolan standards should apply. No ex-FOS employee
should be considered for the post.
The IA should be demonstrably
independent
She should have her own office and should not share staff
with FOS departments or managers. For practical reasons she
may have to be based at South Quay Plaza, though it would
be better if she was elsewhere. Her address should not be
secret or at a PO Box. She should be paid independently, not
by the body she is supposed to assess, nor should she
receive fringe benefits or pension from FOS. She should be
instructed to make decisions independently, without discussing
potential recommendations with FOS managers in advance.
She should have increased authority
The IA should be able to issue instructions (not 'recommendations')
which must be obeyed by the FOS. This will enhance her authority
and credibility and prevent FOS simply ignoring her questions
or wishes. If she has such authority the charade of putting
rejected cases before the Board can be removed. It should
be a requirement that whenever she upholds a complaint about
service standards at FOS, the complainant's case should automatically
be independently reviewed to ensure that the FOS "decision"
has not been affected by the flawed service standards.
She should be permitted to consider
the merits of an Ombudsman's decision
Currently, no appeal is possible against an Ombudsman's decision,
even when the IA has found low service standards and made
an award of compensation. I can think of no other area in
public affairs where a decision involving up to £100,000
(soon to be £150,000) can be taken by a single (perhaps
junior) individual who produces what Anthony Speaight QC refers
to as an "unappealable, summary, compulsory jurisdiction".
(when a consumer accepts a decision, it becomes compulsory
on the firm, without any appeaI or review process). In his
review of the FOS, Lord Hunt was not keen on appeals but in
para 4.19, he does suggest that the Service Review Team (now
disbanded so they cannot help) and Independent Assessor should
be able to reopen some cases.
Accept that there is a bigger problem
In her first report to the Board the new IA said she had found
"no significant problems". That is good to hear,
but she and the FOS are looking in the wrong place. She will
consider about 300 cases in her first year but the Adjudicators
and Ombudsmen handled 166,312 cases in 2009/10, perhaps 200,000
in 2010/11. it is naive to pretend there were not hundreds
of mistakes, perhaps as the staff rush to meet their targets
and collect their incentive bonuses. There is no Independent
Assessor available to investigate the (sometimes life changing)
decisions that were made. The Ombudsman's decision is final.
A respected Independent Assessor
is an avenue though which the process of dealing with possible
mistakes could be handled, provided she has the authority
to require compliance with her instructions and the credibility
to have the confidence of the public.
FOS
website page about the Independent Assessor
The
Independent Assessor's personal website
Independent
Assessor's terms of reference
My
view of the IA's report 2010-11