Ongoing Ombudsman Omnishambles

A new system for handling complaints is failing consumers, say campaigners 
by Helen Dewdney, The Complaining Cow consumer blogger and author of How to Complain: The Essential Consumer Guide to Getting Refunds, Redress and Results!  and Marcus Williamson consumer champion and editor of ceoemail.com

ADR, Ombudsman what it all is

The idea of going to an Ombudsman has been part of the British consumer system for many years. If an electricity or gas supplier gives problems, then going to court or taking the matter to Ombudsman is seen as a last resort to try to resolve things.

And since October last year consumers have had the chance to take complaints to an Ombudsman for other services, such as retail, furniture and airlines. This new world of private Ombudsmen is run by companies who make money by charging retailers a fee for each complaint handled.

But one year on, the new system of privatised Ombudsmen is already causing problems, say campaigners, because of confusion and a lack of oversight.

The new privatised Ombudsmen are appointed by the Chartered Trading Standards Institute (CTSI) and must be members of the Ombudsman Association (OA). However, neither of these organisations seems willing to tackle the slew of problems that has arisen over the last year.

More at Alternative Dispute Resolution: What it all means

 

What’s wrong and how can it be fixed?

  • Issue: There’s no single place for consumers to see which Ombudsman deals with which company. This wastes consumers’ time and causes confusion.

Solution: CTSI should provide a single website listing all the ombudsmen and the sectors that they deal with.

  • Issue: Ombudsmen do not have to list the companies about which they can accept complaints.

Solution: CTSI should dictate that companies must list the companies they deal with and ensure that retailers clearly “signpost” their customers to an Ombudsman scheme, if necessary.

  • Issue: There should be just one Ombudsman for each sector, if possible, and avoid having new Ombudsmen for sectors which are already covered

Solution: CTSI and OA must prevent new entrants into a sector where an Ombudsman already exists.

  • Issue: There are currently no background checks on Ombudsmen, their staff or contractors to make sure they do not have criminal records or financial problems. One Ombudsman even had, until recently, a convicted criminal working as its Director of Communications. He still works for the company as a consultant. The same Ombudsman previously ran a company which went into liquidation owing more than £46,000 to the taxman.

Solution: CTSI must introduce a “fit and proper person” test to ensure that Ombudsmen, their staff and contractors are suitable for this important role.

  • Issue: One Ombudsman runs a “trusted retailer” logo scheme to make additional income. This is a clear conflict of interest.

Solution: CTSI and OA must ensure that the Ombudsman is independent and impartial.

  • Issue: There is no “Ombudsman of Ombudsmen” , so no-one is overseeing the daily operation of Ombudsmen after they have been appointed.

Solution: CTSI must take a more proactive role in monitoring the behaviour of Ombudsmen and provide a means by which consumers can make complaints about them, if necessary.

  • Issue: Despite the Government consultation where respondents overwhelmingly said they wanted ADR to be mandatory, it is still not. Many traders signpost to an ADR provider as they are legally obliged to do, but do not have to engage.

Solution: Government needs to ensure that ADR is compulsory on traders.

  • Issue: The cost of becoming an approved ADR provider is very high, preventing new organisations from entering.

Solution: CTSI should reduce costs and allow smaller organisations to become Ombudsmen in sectors which do not already have them, subject, of course, to a due diligence process.

Jo Holland was a certified ADR provider of mediation services but could not continue due to what she saw as the excessive and disproportionate fees being charged by CTSI. CTSI charge £750 a day for an audit plus flat fees starting at £2000. ADR providers are expected to offer low cost services which should be free to consumer. The high fees charged by CTSI versus what can be charged for the service to users made the business commercially unviable.

She points out that the fees for a small one or two person company are the same as for a company with over 500 employees, which she says seems unfair. When we raised all these issues, and others, with the Chartered Trading Standards Institute (CTSI) and the Ombudsman Association (OA) we were told that nothing would be done.

Although, too late for Jo, last month the Minister for Small Business, Consumers & Corporate Responsibility Margot James MP wrote to the CTSI on behalf of the Department for Business, Strategy and Innovation stating that a review had identified a problem with the way the fee regime was structured. The periodic fee had been used to fund certain functions that, whilst legitimate, should not have been funded by ADR providers. She took the decision that each provider should be refunded the £2,000 plus interest which would be paid for by BEIS, the tax payer.

In June 2016 we undertook an investigation and produced a report  Ombudsman Omnishambles Serious: unresolved issues affecting the operation of the ombudsman ADR system in the UK in response to a Government call for evidence. It showed there were many holes in the approvals process for Ombudsmen.

But now, a whole year after the scheme was launched and four months after our report was published, there is still no action from the OA or CTSI.

What the OA said…
“The Association has no role in the internal management or performance of our members or jurisdiction over them with regards to day-to-day operations. Members are re-validated against our membership criteria (at least every 5 years) and can be expelled from the Association if they no longer meet our criteria.”

What the CTSI said…
“On the specific issues raised the CTSI mandate is to check applicant bodies for compliance with the bare requirements of the consumer ADR legislation. Our agreement with BIS does not allow for any widening of these requirements and, as such, there is currently no general ‘fit person’ test.”

The CTSI is funded by the taxpayer through the Department Business, Energy and Industrial Strategy, which is ultimately responsible for implementing the EU law on ADR.

Future
In theory, the use of ADR, including an Ombudsman, could offer consumers an effective means of redress and expand successfully into other sectors. It should mean less cost, less stress and should be quicker than going to court.

But until these key issues are resolved, the whole Ombudsman sector is in danger of losing the confidence of the consumers whom it’s supposed to be helping.

 

Do you have experience of complaining about a company via an Ombudsman? Share your thoughts in the comments below!

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1 Response to Ongoing Ombudsman Omnishambles

  1. Johnny Debt says:

    …”charging retailers a fee for each complaint handled.” You therefore have to question who are they actually working for?

    I have in the past had dealings with the Financial Ombudsman Service (FOS) and they appear to have a three tier system. When making a complaint, say about PPI, they will instantly reject the first complaint so that the onus is on the customer to push the complaint to the second tier. Eventually persistence will get the FOS to review properly when they are approached for a third time. Do not let them put you off from taking your complaint further!

    In 2014 FOS were charging banks a fee of £550 for each case they handled.

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