COVID Pushes Up Ombudsman Complaints Caseload By 45%

By Martin Croucher
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Law360, London (April 1, 2021, 12:18 PM BST) -- The Financial Ombudsman Service has said the number of complaints it received in the last financial year jumped by almost 50% more than it had budgeted for, because of a surge in demand created by the COVID-19 crisis.

The disputes resolution organization said its general caseload had risen in the year ending in March this year from a projected 145,000 to what is now forecast to hit 210,000 — a 45% increase. The numbers were revealed in the organization's annual budget for the forthcoming financial year, from April 2021 to March 2022.

"The scale of our challenge is significant: the pandemic has resulted in a substantial increase in demand," the ombudsman service said on Wednesday. It added that it would probably see high levels of complaints this year because of the way in which companies treat customers in financial difficulties.

"This includes complaints from  [small and midsize business] customers relating to business lending," the service added in its report.

The organization said it did not know how much the surge in cases would continue. But it noted that it had budgeted for 160,000 new general caseload complaints in the next financial year. The numbers do not include disputes over payment protection insurance, which have been falling.

Many lenders wrongly sold the insurance to buyers who would not qualify to make a claim, resulting in a huge demand for refunds. But the Financial Conduct Authority set an August 2019 deadline for consumers to file claims to their lenders, which could be escalated to the Ombudsman.

The service was expecting to receive 100,000 PPI disputes in the financial year to this March, but handled just 45,000. It expects to receive only 10,000 claims in the next financial year. The service announced earlier this month it was considering whether to lay off 150 staff as a result of the drop in PPI claims.

Following the announcement that it was reducing its headcount, the ombudsman service said on Wednesday that its staff-related expenses would fall from £163 million ($224 million) in the last financial year, to £158 million in the financial year that started on Thursday.

The disputes service was described as unfit for purpose on Wednesday by the Institute of Economic Affairs, a free market think tank. The IEA said the rising cost of settling disputes had placed a burden on financial services companies that fund the service via an annual levy.

--Additional reporting by Najiyya Budaly. Editing by Joe Millis.

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