Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will take steps to commission a survey into public trust in the Financial Ombudsman Service.

As an independent body, the Financial Ombudsman Service (FOS) is governed by the framework of duties set out in legislation by Parliament. However, the Government believes it is vitally important that the FOS should be accountable for its performance and the quality of its work and will continue to hold it to account. The FOS answers to a board of directors, appointed by the Financial Conduct Authority, and must make a report each year on the discharge of its functions which is required to be laid before Parliament. This ensures Parliament is able to scrutinise the efficiency, effectiveness and economy with which the FOS carries out its functions. Treasury officials also regularly meet with FOS officials to discuss relevant emerging issues.

The FOS commissioned an Independent Review of its service in 2021, which found that the FOS is widely respected and viewed as reaching fair and impartial outcomes in the majority of cases but identified some key areas for improvement. In response to the Independent Review, the FOS published its ‘Action Plan’ which sets out how it will improve its operational effectiveness and its readiness to deal with current and future challenges in the context of a rapidly evolving financial services industry. This includes improvements to its digital capabilities and financial sustainability. The FOS provides regular public updates against its progress to deliver the Action Plan which provide regular opportunities for scrutiny.

In its most recent Annual Report, published in November 2022, the FOS reported that it had reduced its unallocated case backlog from 90,000 to just over 37,000 over financial year 2021-22. The Treasury will continue to monitor the FOS’s delivery of its Action Plan.

The FOS Independent Assessor (IA) is a person appointed by the FOS Board who provides an important opportunity for consumers to bring complaints about the FOS’s conduct or capability. The Independent Assessor is required to take an impartial approach and can make recommendations to the FOS about operational issues such as communication and timeliness.

The IA also provides important scrutiny of the FOS through their annual report which makes broader recommendations to the FOS about how it can improve its service: https://www.financial-ombudsman.org.uk/who-we-are/governance-funding/annual-reports-accounts

The IA’s annual reports provide data on complaint numbers. The reports show that in the past 5 years, the IA reviewed around 2887 complaints. In each of these past 5 years, the number of cases reviewed by the IA represents fewer than 0.4% of all complaints brought to the FOS. Due to reporting system changes, data is not available going back 20 years.