FINANCIAL SERVICES Ombudsman Bill Prasifka has asked the public, financial institutions and the Government for assistance in making his office more effective and in giving complainants a better service. Aggrieved customers in the six months to June lodged 3,600 complaints with the Ombudsman which, as Mr Prasifka said, is as much as his office can now handle. Since the Government is unlikely to heed his request for extra staff, given obvious financial constraints, he has suggested some improvements that involve no extra cost to implement.
One is that financial institutions – banks, building societies, insurance companies and others – should resolve customer issues at an earlier stage. Of the complaints received by his office in the last six months, about one quarter went in the complainants’ favour, three quarters were not upheld, and one per cent went to mediation. A much greater effort sooner to address and resolve complaints would save both the complainant, financial institution and ombudsman’s office time and money.
Mr Prasifka’s second request is to repeat an earlier call to Government to allow him to “name and shame” those financial institutions that are found to be at fault. Under current law, the investigation of customer complaints takes place in private, and the findings are also private: only the parties to the dispute know the outcome. It means the ombudsman, when publishing summary details of individual cases, cannot identify the offending institution.
That means wrongdoers in the financial services industry are protected and are not held publicly accountable, which leaves the public – without that knowledge – less well protected against the mis-selling of investment products.
The difficulty is that financial service providers fund the office of the Financial Services Ombudsman via levies and therefore finance the cost of the dispute mechanism. But while they do pay the piper, should they be allowed to call the tune?
It hardly serves the public’s interest that the misdeeds of the financial services sector, however small in number, cannot be revealed. Nor does it do anything to inspire public confidence and trust in that industry if all relevant aspects of its performance and behaviour are not open to full disclosure. The Government should heed Mr Prasifka’s call and change the legislation to ensure the industry is made fully and publicly accountable both for its deeds and misdeeds.