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Cross-border disputes

Adrian Dally

Head of Policy

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a statutory footing...

we are the statutory ADR scheme set up by Parliament

Financial Conduct Authority (the regulator)

Financial Ombudsman Service (adjudicates on unresolved disputes)

Financial Services Compensation Scheme(fund of last resort)

Financial Services &

Markets Act 2000

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our role…

we are tasked with resolving individual disputes “quickly and with minimum formality”

our job is to settle individual complaints: fairly quickly reasonably informally

we cover all retail financial businesses based in the UK… …and some based elsewhere in the EEA who have joined

voluntarily it does not matter where the complainant lives – anywhere

in the world.

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formal conclusions

to ombudsman

mediated settlements

the process…

customercontactteam

unable to resolve

adjudicatorassessment

2

adjudicator investigatio

n

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the number of new cases...

year ended 31 March

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

220000

240000

260000

280000

300000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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accessibility matters…

The problem – in the past, we had fewer complaints from:

younger consumers

consumers from ‘lower’ socio-economic groups

consumers with disabilities

consumers whose native language was not English…

some groups of consumers find it harder to complain than others so we try to make it easier to contact us

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accessibility matters even more…

…and we realised from stakeholder research that:

consumers from ‘lower’ socio-economic groups were more likely to experience detriment from financial businesses

the average UK / EU reading age was 11

even in 50 years time, we will still have to deal with many consumers ‘off-line’

…because this reflected deeper issues in society as a whole…

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what we did…

specially-trained team of front-line advisers to work with vulnerable consumers

work with front-line community and advice workers to reach ‘lower’ socio-economic groups

three-way telephone conversations

on-line video and audio content

text-relay and sign-language

information in alternative formats – e.g. large print, CD/DVD, EasyRead

we made it easier to contact us by removing as many barriers as we could

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language matters too…

We handled this by:

instant over-the-phone interpretation

translation of correspondence

website information in 25 languages

Total of 2282 cases handled in languages other than English or Welsh – 25% in non-European languages

in 2012 we had 1910 complaints from outside the UK from 104 different countries

in 46 different languages

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the results so far…

Some positive progress, for example:

cases from unskilled consumers 5% 12%

cases from skilled / semi-skilled consumers 36% 54%

cases from professional / managerial consumers 59% 34%

21% of complainants have a disability (18% in population)

cases from non-white consumers 8% 12%

…with no difference in outcomes between groups

more cases from ‘lower’ socio-economic groups and from those with a disability

or from non-white backgrounds

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cross-border disputes matter…

The internal market in financial services is growing

4% of EU citizens holding shares, bonds or investment funds bought them in another Member State,

3% of EU citizens having a bank account opened itin another EU country,

2 % of those with a mortgage, credit card or personal loan bought their product in anotherEU country and

1% of those having an insurance product bought it in another Member State.

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so we have FinNet…

…to help consumers find the right ADR body when they complain about a trader in another member state

the consumer contacts the nearest (home) ADR body.

the nearest ADR body provides the consumer with the information about the ‘competent’ ADR body in the country of the financial services provider

then

the home ADR body sends the complaint to the ‘competent’ ADR body (or helps the consumer to do so)

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FinNet coverage…

…is getting better, but there are gaps

Country Banking Payments Insurance Investments

Austria FIN-NET FIN-NET   FIN-NET

Belgium FIN-NET FIN-NET FIN-NET FIN-NET

Bulgaria        

Cyprus        

Czech Republic FIN-NET FIN-NET   FIN-NET

Germany FIN-NET FIN-NET FIN-NET FIN-NET

Denmark FIN-NET FIN-NET FIN-NET FIN-NET

Estonia FIN-NET FIN-NET FIN-NET FIN-NET

Greece FIN-NET FIN-NET FIN-NET FIN-NET

Spain FIN-NET FIN-NET FIN-NET FIN-NET

Finland FIN-NET FIN-NET FIN-NET FIN-NET

France     FIN-NET FIN-NET

Hungary FIN-NET FIN-NET FIN-NET FIN-NET

Ireland FIN-NET FIN-NET FIN-NET FIN-NET

Italy FIN-NET FIN-NET FIN-NET FIN-NET

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FinNet coverage (continued…)

Country Banking Payments Insurance Investments

Lithuania FIN-NET FIN-NET FIN-NET FIN-NET

Luxembourg FIN-NET FIN-NET FIN-NET FIN-NET

Latvia        

Malta FIN-NET FIN-NET FIN-NET FIN-NET

Netherlands FIN-NET FIN-NET FIN-NET FIN-NET

Poland FIN-NET FIN-NET FIN-NET FIN-NET

Portugal FIN-NET FIN-NET FIN-NET FIN-NET

Romania        

Sweden FIN-NET FIN-NET FIN-NET FIN-NET

Slovenia        

Slovakia        

United Kingdom FIN-NET FIN-NET FIN-NET FIN-NET

Norway FIN-NET FIN-NET FIN-NET FIN-NET

Iceland FIN-NET FIN-NET FIN-NET FIN-NET

Liechtenstein FIN-NET FIN-NET    

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FinNet’s caseload…

…is growing

YearTotal number of cross-border cases handled by FIN-NET members

Cross-border cases by sectors

Banking Insurance Investments Other

2007 1 041 492 267 280 2

2008 1 346 673 326 335 12

2009 1 542 884 244 410 4

2010 1 794 1 123 348 302 21

2011 1°854 992 518 315 29

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the challenges ahead…

…there are a number of challenges if ADR is to achieve its full impact

achieve fuller coverage

better accessibility for all consumers – not just on-line

better visibility and branding

better links with regulators

better added value through transparency

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Any questions?