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Annual report and accounts 2012/13

Annual report and accounts 2012/13 1


Contents

Ombudsman Services is an independent dispute resolution service for the communications, energy, property and copyright licensing sectors.

4

Chief Ombudsman overview

5

Year at a glance

8

Timeline10

Our vision:

• • •

to provide excellent complaint resolution for consumers and participating companies; to make recommendations for improvement or change to companies within the sectors; and to promote the benefits of independent complaint handling to other industries and their customers.

Communications

Our values:

Aim 1: Provide independent dispute resolution that is high quality,  proportionate and effective Process diagram

12

Aim 2: Ensure that all sections of the community have access to the service

16

Aim 3: Have a highly skilled, informed and motivated workforce

18

Aim 4: Work with the industry and regulators to improve customer  service and complaints handling

20

Aim 5: Enhance the reputation of the company as an independent and reliable commentator of effective dispute resolution

22

Aim 6: Ensure the business model is responsive and sustainable and provides value for money

24

Aim 7: Seek new areas of business where there is clear consumer benefit and increased flexibility and resilience for the company

25

15

Overview28 Complaint types

30

At a glance

32

Sharing the learning

34

Energy Overview

• • • • •

38

Courteous

Complaint types

40

At a glance

42

Independent

Sharing the learning

44

Overview

48

Complaint types

50

At a glance

52

Sharing the learning

54

Property

Accessible Effective

Copyright Licensing Overview

Consistent

Board report

Financial statements

2 Ombudsman Services

Foreword from the Chair

58

The directors’ report

62

Customer satisfaction research

64

Service complaints

65

Report of the Independent Assessor

66

Independent auditor’s report

70

Year ended 31 March 2013

71

Notes to the financial statements

73

Annual report and accounts 2012/13 3


Foreword from the Chair, Professor Dame Janet Finch DBE This is my third year as Chair of Ombudsman Services. I am very grateful for the support that I receive consistently from other board members and from the executive to assist me in this role. During the last year the company has gone from strength to strength. As shown in this report, we have introduced new processes and an enhanced IT system, and these changes have created a very dynamic feel to the organisation. We are moving at a rapid pace to ensure that we provide an outstanding service to consumers and to our participating companies. These changes have also helped the board to further enhance its contribution. We are now able to monitor a wider range of information, for example, on quality measures.

At a national level consumer policy is developing rapidly, with all political parties now more focussed on this important topic. Ombudsman Services is an important part of the consumer landscape and the board encourages active collaboration with these agendas. At the same time, we are very conscious that our role is to be completely even-handed between the consumer and the participating company when we resolve disputes. The board is pleased to see that enhanced relationships with companies have developed during the year, so that we can add further value to their operations and we can learn from them.

Chief Ombudsman overview, Lewis Shand Smith Ombudsman Services has implemented a series of major change programmes during the year: the customer journey, to know and be known, employee engagement and business development. These programmes were successfully achieved, while consistently meeting key performance indicators and without increasing unit costs.

I would like to offer my personal and warm thanks to board members, to the executive and to the employees at Ombudsman Services for their contributions during the year. The quality and reputation of our service depends totally on them.

Professor Dame Janet Finch DBE Chair of the Board

The customer journey We have two sets of customers – the consumers who make complaints and the companies who participate in our schemes. Our product is dispute resolution and we aim to deliver this quickly, effectively and at reasonable cost. We owe it to our customers to provide the best possible service and we constantly seek ways to improve and become ever more efficient. During 2012/13 we removed non-value added steps from our processes and refined the way we manage complaints to make us more efficient and flexible. Our processes are assured by strengthened quality control and are supported by our team of ombudsmen, who provide advice and guidance and who make final decisions when necessary. We have underpinned the customer journey by a large investment in new technology, which not only helps our officers but makes us more accessible to customers and other stakeholders.

To know and be known Our to know and be known change programme has enabled us to have a good understanding of the context in which we operate and the external developments that have a direct impact on us. It has heightened awareness of our service with other sectors and members of the public and helped us to provide structured feedback on our learning from complaints to relevant stakeholders. Employee engagement Our organisation is only as good as our people. Our employee engagement change programme concentrates on supporting and rewarding our people as well as ensuring they have forums for debate and feedback. Business development Business development is a key priority for the Ombudsman Services board. During 2012/13 we won the bid to become the ombudsman and investigation service for the Green Deal – the government’s flagship environmental policy that aims to improve the housing stock and reduce the consumption of energy. Having independent redress available should something go wrong gives confidence to householders considering a Green Deal plan. We also expanded our copyright licensing remit to cover most of the collective management organisations. We welcome the initiative taken by the government in the Enterprise and Regulatory Reform (ERR) Act,

which encourages voluntary regulation and redress but gives the secretary of state powers to impose this if necessary. An amendment made to the same act will introduce a requirement for letting and managing agents to be part of an ombudsman scheme. The future of the ombudsman European Union (EU) legislation on alternative dispute resolution means that each member state must ensure that independent redress schemes are available for all consumer transactions. The member state must be able to show that these schemes comply with certain criteria, provide the facility for complaints to be made online and be able to deal with cross-border disputes. I believe passionately in the work of the ombudsman – we really can and do make a difference. A dispute over £100 may not seem a lot to a global company but it makes a huge difference for the person struggling to make ends meet. Easy access to an independent means of resolution not only gives a measure of protection, but also gives consumers confidence to engage with the market and so brings benefits to industry. As Ombudsman Services celebrates its 10 year anniversary, we look forward to the challenges ahead. We are confident that we already comply with the EU legislation and are proud to demonstrate that we are independent, fair, efficient, cost effective and, above all, customer focussed.

Lewis Shand Smith Chief Ombudsman 4 Ombudsman Services

Annual report and accounts 2012/13 5


Ombudsman Services We resolve complaints from consumers about companies that have signed up to our service. We aim to resolve complaints as early as possible. We are entirely independent; we do not take sides and we make decisions based on the facts.

19,639 complaints resolved in 2012/13

6 Ombudsman Services

Annual report and accounts 2012/13 7


Year at a glance

Number of new contacts We responded to 122,589 new contacts during 2012/13, an average of 490 per working day. This is 6% more than the previous year. The figure does not include subsequent contacts about the same case. New contacts

122,589

49%

Written contacts

51%

Telephone contacts

Just over half (51%) of the consumers who contacted Ombudsman Services for the first time used a telephone. Of the 60,019 written contacts, 78% were emails and online forms, 22% were letters and fewer than 1% were faxes. Reasons we accept a complaint about a participating company Companies have eight weeks to resolve a complaint, after which their customer can complain to us. In line with previous years, the majority (77%) of complaints we accepted were because eight weeks had elapsed without resolution.

Where appropriate, an ombudsman may use discretion to accept a complaint that is outside of our terms of reference. For example, a consumer must complain to us within nine months of first complaining to the service provider. If the complainant was unable to contact us sooner, perhaps because of serious illness, we may accept their case. We accepted 3% of complaints using ombudsman’s discretion.

Reasons we cannot accept a complaint about a participating company The main reason we cannot accept a case about a participating company is because the consumer has not given the company a reasonable opportunity to resolve their complaint. We work with these complainants to give them advice and signpost them to the appropriate organisation. Other reasons that we cannot accept a complaint include the consumer waiting over nine months to contact us after reporting the issue to the service provider, or waiting more than 12 months to report the problem. These account for less than 1% of cases that are outside our terms of reference.

Sometimes a company provides a final response or deadlock letter, within the eight week period, which states that it will no longer be considering the complaint. The complainant can then bring their complaint to us. A fifth of complaints we accepted were because the company issued a deadlock letter.

The complaints we resolved

34%

Resolved using early resolution and mutually acceptable settlement

66%

Resolved following investigation

Inside and outside our terms of reference Approximately 22% of the new contacts we received during 2012/13 were within our terms of reference; the rest were outside our terms of reference. Of those contacts that were outside our terms of reference, 82% were premature and likely to return, 11% related to companies or sectors that we do not currently cover and 7% were general enquiries and literature requests.

22%

During 2012/13 we resolved 19,639 complaints, 7% more than the previous year.

Inside terms of reference

We resolved 34% of complaints using early resolution and mutually acceptable settlement. This is where we contact both parties, preferably by phone, to discuss the complaint and its resolution and try to reach agreement.

78%

Outside terms of reference

82% Premature

 11% Companies or sectors that we do not currently cover

The remaining 66% of the complaints required further investigation, where we request a case file from the participating company and issue a report.

 % General enquiries and 7 literature requests

8 Ombudsman Services

Awards and remedies

Number of employees

To resolve a complaint we can require a participating company to provide a financial award, to return the customer to the position they were in before the problem occurred or to acknowledge a shortfall in customer service. We can also require a non-financial remedy such as an apology, an explanation, a service or some practical action. If we find the company is not at fault and has acted appropriately, we may decide that no further action is required.

As of 31 March 2013 we had 156 full time equivalent employees, 55% were female and 45% were male.

If the complainant accepts our resolution, it is binding on the participating company, which then has 28 days to implement the remedy. During 2012/13 we required companies to provide both a financial award and a non-financial remedy in 55% of cases. We required a financial only award in 12% of cases and a non-financial only remedy in 21% of cases. We required no further action in 12% of cases.

Male

Female

45%

55%

70

86

Income breakdown

Key performance indicators (KPIs) We have key performance indicators (KPIs) that measure the time we take to respond to calls and correspondence and the time we take to issue reports. During 2012/13 we achieved KPIs in all categories. Number of participating companies We have almost 8,500 participating companies signed up to our service. We handle complaints for a range of sectors including communications, energy, property, copyright licensing and the Green Deal.

38% Subscription fees 62% Case fees Total operating costs: ÂŁ8 million

Annual report and accounts 2012/13 9


Annual report and accounts 2012/13 11


Provide independent dispute resolution that is high quality, proportionate and effective The customer journey We are always looking for ways to improve the speed and quality of our service. In 2012/13 we implemented a new case management system and with it a host of process changes to improve the customers’ journey from raising a complaint to resolution. We are seeing excellent results. We have resolved over 1,000 more complaints than the previous year, we have consistently achieved our performance targets and our forecasts are more accurate. Chief Ombudsman Lewis Shand Smith says: “We have adapted our business to offer a quicker, more robust, higher quality service. We have handled more complaints, at the same unit cost, while introducing new systems and new ways of working. This is just the beginning of our journey.” Faster processes During 2012/13 we resolved around 6,500 (34%) complaints over the phone and we want to do this more often. Having a conversation is much quicker than written communication; we can manage consumers’ expectations more effectively and explain our reasoning. Working quickly and openly with us also helps companies to retain their customers. We have developed our communication skills and introduced a new telephone system to support this way of working.

12 Ombudsman Services

Complaints can now be made and accepted over the telephone. Where possible we will continue to contact both parties in the dispute by phone – that personal contact can often lead to an agreed resolution. We resolve disputes in three different ways – early resolution, mutually acceptable settlement and Ombudsman Services decision. Where the resolution is obvious to us from the beginning we will encourage both sides to accept it – we aim to do that within five days, but often can succeed within a few hours. When the issue is more complex then we will collect the evidence, analyse it and propose a resolution; the aim is to find a settlement that is acceptable to both sides. If this is unsuccessful, or it is clear from the start that this route will not lead to resolution, then we proceed with the more traditional investigation and provide a report. In all circumstances the proposed outcome rests with us and when accepted by the complainant becomes legally binding on the company.

Same high quality We have taken our quality checking to the next level by introducing an independent quality assurance team. The team sets the standards for written and verbal work and ensures that quality assessments are fair, consistent and transparent. It also monitors service complaints about us and implements changes as a result of lessons learned. The team makes recommendations to help employees improve and give them confidence in their work. Investment in technology Our new case management system can be adapted to meet the changing needs of our business, now and in the future. It includes a customer facing portal that consumers and companies will be able to access to get updates on their own case. We also have new phone and workforce management tools that help us get the most out of our time and ensure that customers get to speak to the most appropriate person at Ombudsman Services. Forecasting Our operational support team forecasts complaints and ensures that we meet the key performance indicators set by the regulators. Real-time analysts manage our resource to handle peaks and troughs in complaints and to monitor the output of employees.

“We have adapted our business to offer a quicker, more robust, higher quality service. We have handled more complaints, at the same unit cost, while introducing new systems and new ways of working”

Director of Dispute Resolution Tracey Newman says: “We are consistently achieving performance targets and can plan our workload up 12 months in advance (within 5%). We can better plan our head count and have a much leaner, efficient organisation as a result.”

We have a tailor-made forecasting model that looks at historical data and intelligence to plan capacity requirements and produce management information. We have also introduced regular business planning meetings, where managers discuss performance, volumes and issues that are likely to cause an increase in contacts. Tracey continues: “It is not an easy feat forecasting complaints, as a number of factors can influence the volume of people who contact us. We have taken measures to close the gap between our expectation and the reality.”

Case study: Early resolution We received a call from a complainant at 2.50pm and by 3.17pm the same day the company and the complainant had agreed to a resolution. The customer had cancelled her contract but it had mistakenly rolled over – a simple shortfall in customer service. The complainant verbally accepted our account of the complaint and agreed to send across supporting evidence. When we spoke to the company it acknowledged the error it had made and agreed to the proposed resolution.

Annual report and accounts 2012/13 13


Process diagram

Measuring success

Looking ahead

A good measure of our standards is feedback from the people who use our services. We run customer satisfaction research every quarter to ensure we are achieving good standards. It measures the whole customer experience and gives us an early indication of problems and successes.

The infrastructure we are putting in place now will help us to achieve high quality outcomes for many years to come. Our new processes and IT systems are responsive to meet the needs of existing and new business.

Enquiries

Tracey says: “We have many different strands to our business and we need a stable infrastructure around the operation to handle those strands. We don’t want to restrict ourselves and have made sure that our case management, skill based routing and workforce management systems have the capacity to take us wherever we need to go.”

“In our endeavours to lead the way in transparent communication and service excellence, we continue to see real benefit from working with Ombudsman Services. The impartial lens that Ombudsman Services applies to consumer referrals, provides not only a route for resolution, but also some key learnings in terms of ways to do things better. It is clear that both service providers and Ombudsman Services share a common goal – to provide workable, balanced and fair solutions for customers. This continues to be the case as we move forward, helping to shape a better energy industry for all.”

Enquiry comes in

Verbal acceptance

Possible early resolution

Case management

British Gas, Ian Peters, MD, Residential Energy

Triage and case preparation

Case study: Mutually acceptable settlement The consumer wanted to know which car parking space was allocated to his flat. The issue was resolved but the complainant was unhappy with the time and trouble it took and wanted £250 from the managing agent.

Evidence comes in

Investigations

We called the complainant and confirmed our understanding of the issue – that the parking allocation was resolved but there had been some delays. We explained that the developer was responsible for allocating the parking space, not the managing agent, and that the company’s only shortfall was the delay in responding. We recommended that the managing agent apologise and make a goodwill payment in recognition of the shortfall. We explained that the complainant had 14 days to accept our resolution or to provide representations that showed a significant error in facts or significant new evidence not previously available. The complainant agreed to the resolution, as did the managing agent. Head of Investigations Angela Taylor says: “The investigation officer demonstrated good sector knowledge, explaining where the responsibility lay, the importance of paying service charges and the consequences of not doing so. The complainant was interested in punitive actions but we explained that is not our role and gave reasons for the award we recommended. This is a good example of our new verbal process, and we hope to resolve more cases – where appropriate – in this way.” 14 Ombudsman Services

Mutually acceptable settlement

Ombudsman Services decision Annual report and accounts 2012/13 15


Ensure that all sections of the community have access to the service To know and be known Most people use the services of an ombudsman only once and so it is essential that we are visible and accessible. A website that is easy to use The Ombudsman Services website is essential for informing people about what we do, for offering advice and for taking complaints. During 2012/13 it received 307,000 visits, with the Communications, Energy and Ombudsman Services homepages being the most popular landing pages. After arriving at the website, the most popular pages to visit were the ‘contact us’ areas and the complaint form. Director of Policy and Communications Susan Fox says: “We changed the website’s content and layout to make it easier to use. New features include a Twitter feed and a report card with our latest published statistics. The ‘complain now’ button is more prominent and, as a result, visits to the ‘what are you complaining about?’ page have increased by over 700%. The ‘participating company’ tab is also more defined to clearly differentiate the advice we give to consumers from that aimed at companies. We have also added some useful content, including details of our governance and credentials. Newsletters, case studies, press statements and advice are available to download.”

16 Ombudsman Services

Accessing our service

Plain language

Reaching a wider audience

We make it easy for consumers to contact us by providing a choice of methods, including telephone, textphone, email, online forms, post or fax. We make reasonable adjustments to ensure that all consumers – particularly those with disabilities or whose first language is not English – have access to our service.

As part of our commitment to improving accessibility, we have refreshed our writing guide. It is based on plain language principles and we have built it into our quality assurance process to ensure we communicate clearly and effectively.

We now have over 1,000 followers on Twitter (@OmbudServices), including national journalists, participating companies, consumer champions and members of parliament. Social media is an effective way to provide information and comments and to share links and advice. In November 2012 we launched our Facebook page to engage with an even wider cross-section of consumers. We use Twitter and Facebook to signpost consumers to our website, our contact centre or to other relevant consumer organisations, and to keep people informed of our corporate events and activities.

During 2012/13 we responded to approximately 150 requests to provide documents in alternative formats such as large print, braille and audio. We also offered the services of a translator and provided documents in different languages.

We have also simplified our literature by replacing booklets with simple fact sheets that explain our services and processes. These can be updated quickly so that consumers and companies always have access to the latest information.

Susan says: “It makes sense to be where people are complaining, and increasingly this is on social media sites. Social media enables us to raise our profile and it gives us a great opportunity to show our personality. We are a friendly, approachable organisation and our tweets and Facebook messages reflect this.”

“Social media enables us to raise our profile and it gives us a great opportunity to show our personality. We are a friendly, approachable organisation and our tweets and Facebook messages reflect this”

Ombudsman Services’ comments have been retweeted by consumer industry leaders, such as Citizens Advice, Money Saving Expert Martin Lewis and the BBC’s property expert Henry Pryor, to thousands of Twitter followers. Spreading the word

Showing your commitment We provide materials for participating companies to show that they are signed up to Ombudsman Services. We encourage companies to display our logo to demonstrate their commitment to customer care.

We attend consumer conferences and exhibitions to share the learning from the complaints we handle. For example, we exhibited at the Trading Standards exhibition in Manchester, spoke at the European Union consumer summit in Brussels and attended a seminar to review the Communications Act from a consumer perspective. These events are a valuable opportunity to share experiences and best practice in helping consumers.

@OmbudServices tweets Christmas is coming and the goose is getting fat, don’t put your money in the claims companies’ hats tinyurl.com/bvjm3da Let them eat cake! We’ve spied lots of flour, eggs, sugar and milk in our colleagues bags today for our @macmillancoffee event tomorrow. Chief Ombudsman Lewis Shand Smith is attending @EnergyUKcomms annual Parliamentary reception at the House of Commons today Want to know more about the work we do with communications companies? Latest newsletter and cases studies http://bit.ly/11vrzCh Thinking about switching your energy provider? Just make sure that you are informed, prepared, that you know what... http://fb.me/1H9wYiN8L

Annual report and accounts 2012/13 17


Have a highly skilled, informed and motivated workforce Employee engagement The experience of our customers and stakeholders is driven by a friendly, welcoming and knowledgeable service delivered by appropriately skilled individuals. We have a strong philosophy of developing and promoting from within, so we can put the talents of our people to good use. Highly skilled During 2012/13 our expanded learning and development team arranged a variety of training, from Plain English courses to job specific knowledge and management development, to give people the confidence and ability to do their jobs well. To support the move towards telephone based resolutions, we trained people in telephone skills, negotiation skills and understanding conflict. Director of Corporate Services Richard Brown says: “We have taken enormous strides to ensure our people are equipped with the right skills, knowledge and tools to allow them to deliver a consistently high quality, high performing service.”

We also provide opportunities for people to develop by offering secondments in different areas of the business and by involving employees in significant projects. The project to bring in a new case management system required input from across the business and allowed employees to showcase their talents. Richard adds: “We create opportunities for people to work in different roles to enhance their understanding of the business and their potential. It also ensures we have people who are flexible to work as the business requires. All of this helps to transform a good customer experience into a great one.” Informed In a fast-changing environment, it is important that employees are informed of change effectively. Chief Ombudsman Lewis Shand Smith says: “Our intranet provides a central hub for news and essential information. We publish a weekly employee newsletter and use managers’ briefs to deliver key corporate messages face to face. We have plans to develop these tools more in the coming year and to support managers as communicators.”

“Our people have shown an incredible commitment to the company and their own development. The spirit in which they do this work is fantastic and a vital part of the success of the business”

18 Ombudsman Services

Richard says: “We built these values into our new appraisal process to ensure that we recognise and promote employees’ contributions to our working environment. We have a far better idea of what motivates our employees and whether they have the support they need to do their jobs well. Those who feel valued and motivated will provide the best possible service to our customers and will continue to support our ambition for growth.”

Motivated Hard work does not go unnoticed. In October 2012 we held an internal event to celebrate the achievements of our employees. We honoured people who gained certificates and awards in areas like ombudsman practice, leadership and management, fire safety and first aid. Lewis says: “It is really important that we stop, take stock and celebrate our achievements. Our people have shown an incredible commitment to the company and their own development. The spirit in which they do this work is fantastic and a vital part of the success of the business.”

Giving employees a voice During 2012/13 we ran an employee survey to find out how our people feel about the business and to provide a benchmark for future improvements. The results showed that many of our people are willing to go the extra mile and are happy to recommend our services.

We also have an events committee to organise social activities and we are putting in place a charity crew to organise fundraising and voluntary activities for a nominated charity of the year.

However, there is always work to be done. To build on the areas identified for improvement, we have expanded our learning and development activities and are improving our internal communications methods. Richard says: “We know we must preserve the good things about the organisation, such as its customer focus and good working relationships, amidst the changes we are making.”

Regular opportunity for employee feedback is important. We have a staff consultation group which has been involved in the significant developments at Ombudsman Services, such as the job evaluation review, establishing a new appraisal process and reviewing employees’ benefits.

“We have taken enormous strides to ensure our people are equipped with the right skills, knowledge and tools to allow them to deliver a consistently high quality, high performing service”

Values and behaviours We have completed an organisationwide exercise to find out what values and behaviours we need in the workplace to improve performance and help us through a period of great change. We asked our people to think about how they contribute to our strategic aims and how we can continue to be more productive and efficient. We developed values – passion, understanding and togetherness – that encourage efficient working, cooperation and positivity across Ombudsman Services.

Annual report and accounts 2012/13 19


Work with the industry and regulators to improve customer service and complaints handling Sharing the learning Our work on consumer complaints means we have a unique overview of the sectors we cover. We use this position to raise awareness of issues, comment on consumer affairs and share best practice. Director of Policy and Communications Susan Fox explains: “We are in a privileged position. We learn a great deal from different stakeholders and have a duty to share this through our meetings and publications.” Identifying issues If customers tell us about a problem a company isn’t aware of, we alert the company to the issue and work with them to manage their customers’ expectations. Similarly, if the company is aware of an issue that may cause a spike in complaints we expect them to notify us. During 2012/13 a number of large service providers switched IT systems, causing some disruption. Because they alerted us to the disruption, we were able to keep their customers up to date and potentially reduce complaints further down the line. Guidance We give guidance to our participating companies to prevent problems recurring. For example, when it emerged that some companies were not always alerting consumers to their right to redress, we provided standard letter templates, approved by the regulators, for them to use. We have also written guidance on case files to ensure participating companies provide the right information to help us resolve complaints quickly and accurately. 20 Ombudsman Services

Regular meetings

Consumer liaison panel

Relationship Manager Sue Jackson is the main point of contact for participating companies and maintains a good working relationship with them. Sue shares information and makes sure that different parties are kept up to date.

We bring together consumer groups at least twice a year to share news and to discuss consumer protection issues. The consumer liaison panel has representatives from organisations including Age UK, Citizens Advice, Which? and Trading Standards.

Sue says: “Participating companies need to understand what we do and work effectively with us to resolve disputes. The better we understand companies, the better we are at resolving their customers’ complaints.”

Susan explains: “We use the panel to discuss consumer protection in the sectors we cover and to raise concerns. A good example of the effectiveness of the panel is the issue of energy claims management companies. They have been promoting their services to vulnerable consumers, offering to ‘win compensation’ from energy companies for a fee. We urged organisations to share the message that redress is free for consumers and that awards are not guaranteed. Panel members were not aware of the issue and agreed to report back on any experience of claims management companies.”

Sector liaison panels Our sector liaison panels provide a good way of sharing the learning and keeping up to date with industry news. These panels, for the communications, energy and property sectors, meet at least twice a year. Susan Fox says: “It is useful to have an open forum where we can discuss process changes, government policy and emerging issues. These meetings help us to understand the impact initiatives can have on companies and their customers, and they give us a chance to get feedback. They also help us to forecast complaints and plan our resource effectively.”

“The relationship between the Citizens Advice consumer service and the Energy Saving Advice Line was formed as a result of the panel.” Suzanne Kuyser, Service Director of the Trading Standards Institute, adds: “We find our membership very useful. Sharing and networking on consumer issues is invaluable to our planning and policy work.” International relations Ombudsman Services is a founding member of the National Energy Ombudsman Network (NEON). This enables us to share good practice with ombudsman schemes across Europe and to participate in international discussions on consumer affairs.

Case studies and advice To illustrate typical consumer problems, we publish regular case studies. We have adopted a creative and topical approach to capture interest in the serious messages we want to get across. Last summer we issued a case study to alert people to the dangers of using their mobile phones abroad; it received over 3,700 visits on our website. We followed up the campaign with a back to school article, to raise awareness of the increasing number of complaints from parents whose children have extremely high bills. This received over 2,000 visits.

For Halloween, we published a case study about a buy-to-let nightmare in which a homebuyer complained about a haunted house. The story illustrated how important it is for buyers to be aware of the limits of their property survey. Earlier that month we supported the Citizens Advice Big Energy Saving Week campaign by publishing case studies and advice to help consumers cut utility bills. For our Christmas campaign we commissioned a fun animal cartoon, which used the voices of our employees, to highlight the more unusual complaints we had handled during the year.

Chief Ombudsman Lewis Shand Smith explains: “The European Union (EU) asked us to set up a network of energy ombudsmen. We work together and share our experiences of consumer disputes. It’s one of the few forums where we can talk about EU legislation, find out how others have adopted it and provide advice for European bodies.”

Kate Hobson, Service Delivery Manager at Citizens Advice, says: “Discussions at the consumer liaison panel offer an insight into the current priorities and challenges of each organisation. We have gained a better understanding of some of the attending organisations.

Read all about it We launched our quarterly sector newsletters in April 2012. The newsletters bring together updates on business processes, issues and discussion topics, as well as offering case studies, statistics and advice. They are aimed at participating companies and are available to everyone on our website.

“Participating companies need to understand what we do and work effectively with us to resolve disputes. The better we understand companies, the better we are at resolving their customers’ complaints”

Email feedback@ombudsman-services.org with your name, company and email address to subscribe to our newsletters.

Annual report and accounts 2012/13 21


Enhance the reputation of the company as an independent and reliable commentator of effective dispute resolution Adding value We are passionate about consumer redress and keen to share our views and experience of complaints. Participating in policy debate and development and responding to consultations is a vital part of what we do. Director of Policy and Communications Susan Fox says: “We have an important role to play in demonstrating the value of alternative dispute resolution, so we regularly respond to consultations, speak at events and provide expert comments for the media.” Policy highlights To help contribute to good policy development and decision making, we share our complaints handling experience. During 2012/13 we responded to 35 consultations. These included industry-specific consultations, such as Ofcom’s proposal to simplify switching and Ofgem’s retail market review, and wider consumer protection consultations, such as the European Union (EU) directive on alternative dispute resolution and the Trading Standards Institute consultation on consumer codes. Susan says: “We respond to consultations that affect the industries we provide redress for, or where we have useful evidence or experience that can contribute to the debate. We welcome proposals that increase protection for consumers.”

22 Ombudsman Services

Networking We take the platform at events to give our views and often brief journalists, members of parliament and other organisations on consumer redress. A good example of this is when Chief Ombudsman Lewis Shand Smith spoke at the Building Effective Markets conference, which considered developments in the civil justice system throughout Europe, collective redress and individual alternative dispute resolution (ADR).

We attend the association’s network groups to share experience and learn good practice from other ombudsman schemes; these include the private sector ombudsman group, the editorial board and interest groups for communications, HR, IT and law. Channelling our views To raise awareness of the ombudsman schemes we run, we provide comment for the media and interviewees for radio and TV programmes.

Publishing complaints data We want to share more of the data we hold on complaints. Our new case management system will allow us to access data much more easily.

“We have an important role to play in demonstrating the value of alternative dispute resolution, so we regularly respond to consultations, speak at events and provide expert comments for the media” He also spoke on the importance of trust in business at a round table event organised by Professions for Good, and at an Erasmus School of Law conference on resolving mass disputes. Ombudsman Association To be a member of the Ombudsman Association – the professional association for ombudsmen and complaint handlers – an organisation must demonstrate that it is independent, fair, effective, open and transparent, and accountable. Our membership of the association has recently been revalidated.

During 2012/13 we launched our first consultation, to seek the views of companies, regulators and consumer bodies on the types of data they wanted to see published. The consultation received 200 web visits in the first week and around 30 responses by the end of the exercise. Respondents, particularly the energy sector, engaged in the debate and supported our proposals.

We have featured on the BBC programme Don’t Get Done Get Dom to talk about energy and property complaints, we take part in radio call-in shows to answer consumers’ questions and we have featured in the consumer pages of the national press, including the Daily Mail and Readers Digest.

Susan explains: “There is an appetite for the data we own. Publishing more of our data means we will share the learning with more people about the causes of complaints and how they are handled. This will help improve customer service and inform the work of other consumer bodies.”

Susan says: “We want to raise awareness of Ombudsman Services and what we can do to help consumers, but we don’t want to drum up complaints or cause unnecessary calls to our contact centre. Providing the media with information on consumer stories is a good way of ensuring our messages reach the right people at the right time, when issues are topical and people are interested.”

We will publish data quarterly; it will be available in different formats and will be held on our website for three years. The data will cover the communications, energy and property sectors. We will name participating companies in the energy sector – a radical step that the industry supports. Understanding perceptions We have begun conducting market research into public and stakeholder perceptions of ombudsmen in general and Ombudsman Services in particular. The surveys will provide information on the extent to which members of the public know about ombudsmen and will give feedback on our performance from participating companies and key stakeholders.

Here is a sample of our policy work: We contributed to the development of the European Union (EU) directive on alternative dispute resolution (ADR) and online dispute resolution (ODR). We responded to the Law Commission consultation on unfair terms in consumer contracts. We agreed that some of the terms used in consumer contracts are difficult to understand and recommended that the definition of ‘consumer’ should be extended to cover micro businesses. Proposed contract terms will now be transparent and in plain English. A number of the suggestions that we made in our response to the principles of how the Regulated Industries Unit (RIU) should work have been included in proposals for its first year work plan. These include the need for partnership working, evidence based policy making and a commitment to share best practice.

Annual report and accounts 2012/13 23


Ensure the business model is responsive and sustainable and provides value for money Being responsive and sustainable The challenge for any ombudsman scheme is to be able to adapt to fluctuations in complaint numbers quickly, effectively and cost efficiently. We have met this challenge in a number of ways. We have a new planning team, responsible for controlling the flow of work in the organisation as well as predicting future workflow and mapping this against our resources. As a growing business, we need to make sure that we generate sufficient funds, not only to run the business day to day but to provide funds to invest in our people and our infrastructure.

24 Ombudsman Services

This enables us to continue providing and improving upon a service that represents good value for money for our participating companies. Our pricing policy is a key element in achieving this. Director of Corporate Services Richard Brown says: “Our pricing gives us a flexible model that allows us to match our capacity to demand whilst providing a sustainable platform for improved service delivery.

Seek new areas of business where there is clear consumer benefit and increased flexibility and resilience for the company Ready for more

“The model we have developed is attractive to other areas of the private sector. It is robust, scalable and provides value for money. It enables us to develop our business and to offer an efficient dispute resolution service.”

The government wants greater protection for consumers and aims to cut the number of disputes that go to court by providing more accessible, more affordable forms of redress. We are keen to help by plugging the gaps in redress and offering independent dispute resolution where currently there is none. Director of Business Development Simon Morris says: “We have an important role to play in the future of consumer redress. Our service offers excellent value for money and we are experienced in taking on new sectors. We can offer a flexible service to help companies increase their customers’ confidence. Expanding our remit will make us more resilient but it must not be to the detriment of our existing customers – growth is, and will continue to be, controlled.”

“Our pricing gives us a flexible model that allows us to match our capacity to demand whilst providing a sustainable platform for improved service delivery”

Building on success In summer 2012 we were appointed ombudsman and investigation service for the government’s Green Deal initiative. With experience of handling energy and property complaints, we already covered two of the three areas of redress required by the Green Deal. We have a good working relationship with the Financial Ombudsman Service (FOS), which covers the third area of Green Deal redress – consumer credit. See page 39. We have recently been appointed provider of complaints redress for collective management organisations, building on our experience of handling complaints about PRS for Music. We supported the Department of Business, Innovation and Skills (BIS), the Intellectual Property Office (IPO) and the collective management

organisations in developing new industry codes of conduct. These codes require the collective management organisations (which issue licences, collect royalties and distribute them to their members) to provide alternative dispute resolution. See page 58. In early 2013 we took on paid for TV complaints for Sky. We welcomed the chance to extend our remit and are encouraging other satellite TV providers to offer their customers the same protection. See page 29. In property, we struck a deal with the National Approved Letting Scheme (NALS) to offer its members access to redress at competitive rates. Following the amendment of the Enterprise and Regulatory Reform Bill, which will in time require all letting agents to be members of an ombudsman scheme, we are expanding our services in the letting market. We have also recently extended our service to cover the management of retirement homes. See page 49. New opportunities Asset based finance is a completely new area for us and one in which we can add real value. The Asset Based Finance Association (ABFA) approached us to supply redress to its members. Simon says: “Ombudsman Services is becoming a widely recognised brand. More companies are realising the benefits of offering an independent redress scheme to their customers and are approaching us for a solution.

“Rules prevented the Financial Ombudsman Service (FOS) from looking at complaints about ABFA members so we were able to step in and meet its needs.” A lot of smaller sectors remain without alternative dispute resolution (ADR) schemes. We track policy and are in contact with government bodies and consumer organisations to understand movements in the consumer marketplace. We have a product to be proud of. We welcome companies who want to invest in customer care. Membership of an ombudsman scheme shows that a business cares about its customers; the more services that sign up the better the protection for consumers.

Goodbye to Dr Richard Sills Dr Richard Sills has been at Ombudsman Services since its inception. In June 2002 he helped to set up the Office of the Telecommunications Ombudsman (Otelo) and became the operations director when the company opened for business in January 2003. Over the next 10 years Dr Sills was lead ombudsman for communications and then for energy. He was the company’s first director of business development. In April 2013 Dr Sills retired from full duty but will continue providing support on new business contracts.

To discuss business development opportunities, contact Simon Morris on 01925 430884 or email smorris@ombudsman-services.org.

Annual report and accounts 2012/13 25


10,331 complaints resolved in 2012/13

Communications

26 Ombudsman Services

We resolve complaints from consumers about companies that provide communications services to the public; this includes phone and broadband companies. We are approved by Ofcom, the UK communications industry regulator, under the Communications Act 2003 as an alternative dispute resolution service.

Annual report and accounts 2012/13 27


Communications overview

Next generation complaints We resolved over 10,000 communications complaints in 2012/13 compared to just over 500 complaints 10 years ago when we launched. This is no surprise, given that consumers are now much more reliant on their phones and the internet. Chief Ombudsman Lewis Shand Smith says: “We have learned a lot in the past decade and made significant changes to our service, which will help us to deal with the next generation of complaints.” The communications industry The growing dependence on phone and broadband services, both for consumers and small businesses, means that the consequences can be serious when a service is lost. Last year, uSwitch reported that broadband was becoming as important to people’s lives as water and electricity. Ombudsman Sarah Daniel says: “In the early days complaints were about landlines and dial up. Now consumers have multiple devices for use on the move, such as smartphones, tablets and dongles, as well as traditional landlines and broadband services. These devices affect all aspects of our lives, from keeping in touch to watching television.

28 Ombudsman Services

“We understand the impact on consumers when things go wrong and how important it is to resolve issues quickly and well. We support measures to improve the efficiency and consistency of complaint handling across the industry.” Following its review of alternative dispute resolution (ADR) schemes, the regulator Ofcom issued a set of decision making principles to ensure a standardised approach to resolving consumer disputes in the communications industry. We welcome any guidance that improves the customer experience for all consumers. Sarah says: “Ofcom recognised the work we have been doing to resolve consumer complaints and decided to continue its approval of our service. As there is more than one ADR scheme in the communications sector, it is crucial that there is consistency for customers. We believe the new guidelines are an important step in improving the way that communications complaints are handled.” Trends The new data roaming rules that came into force in July 2010 seem to have had an effect on complaint numbers, as fewer people are complaining about unexpectedly high bills after trips abroad.

“We understand the impact on consumers when things go wrong and how important it is to resolve issues quickly and well. We support measures to improve the efficiency and consistency of complaint handling across the industry”

However, there is a growing number of complaints from parents whose children have been given contract phones to use. Sarah says: “We are aware that mobile phone companies do not normally allow customers to cap their usage and that the customer is ultimately responsible for how they use the phone. However, some complainants tell us the company led them to believe that they would be able to monitor the usage far more closely than is actually the case. “Companies should avoid over promising what customers can do to manage their usage. In many cases, parents would be better advised to purchase pay-as-you-go phones for their children if they want to limit their usage.” The growing popularity and use of smart phones presents opportunities, but also new challenges, for mobile phone companies. Customers are using their mobile devices more and more and their expectations of the services offered by mobile phone companies are increasing.

Emerging issues

Expanding remit

Throughout 2012/13 national media reported on communications companies increasing prices during fixed term contracts. Ofcom ran a consultation on whether consumers needed additional protection from price rises. It is our view that consumers should be given the right to cancel their contract without penalty if the service provider proposes to increase the in-contract price. This option appears to balance the needs of the companies to increase the cost of a tariff while protecting the rights of the consumer.

We have expanded our remit to provide dispute resolution for paid for TV. With phone lines and broadband often linked to televisions, it has become increasingly difficult to see where a complaint starts and finishes. Now all services can be covered, making it fairer for the consumer and easier for the company.

We have seen an increase in complaints from customers who say they have not received handsets ordered from mobile phone providers. We published guidance on these complaints in our April newsletter.

Sarah says: “Customers need more help operating mobile phones. Losing a handset is potentially traumatic because of what is stored on the device, such as music, photographs and videos. Customer service representatives need to be able to answer queries and be sensitive to a customer’s problems.”

Lewis says: “We are pleased that companies see the value of what we do and are choosing to place additional products and services within our jurisdiction. It is a positive step towards greater consumer protection.”

Sarah explains: “If a customer does not receive a handset as expected then we consider it reasonable, in the first instance, for them to contact the communications provider to ask whether it was delivered. We would expect the provider to investigate. If the courier concludes that the handset was delivered then we would, in most cases, expect the customer to try to trace the delivery.”

Annual report and accounts 2012/13 29


Communications complaint types

Customer service

Service and equipment

The level of customer service offered by companies remains a significant driver of dissatisfaction. During 2012/13 over a third of communications complaints related to customer service. We see a large number of cases where the company has misinterpreted the complaint and not addressed the issues that the complainant raised. In some cases, the complaint has not been fully investigated and when we review it we can find a rapid solution. Common examples include the company not allocating a payment to an account or customers not fully understanding their bills.

Problems occur when customers are unable to get a reliable mobile phone signal at home, or wherever they spend most of their time. We welcome innovations such as the provision of signal boosting equipment to customers in order to give them full use of mobile services.

Ombudsman Jon Lenton says: “By speaking more to complainants and companies, we have a better understanding of what has led to the dispute and how to resolve it. We would encourage companies to take the same approach.”

Contracts In December 2011 Ofcom banned communications providers from selling contracts that automatically roll over into a new contract period at the end of the minimum term. In 2012 providers were required to move existing customers off such contracts. We have dealt with a number of cases where the complainant has been unhappy with how their provider has interpreted Ofcom’s regulations and in some of the cases we have required that companies release customers from contracts.

Complaint types

Case study: An appropriate resolution The company sold the consumer a faulty telephone system. There were problems with the handset, the voicemail and transferring calls. The consumer reported the problems to the company but it was unable to provide a solution.

37%

Quality of customer service

21%

Billing and disputed charges

Within its case file, the company acknowledged that the consumer had experienced problems and it offered to continue to provide help. We did not feel this was appropriate, as the company had made a number of attempts to resolve the problems and had failed. The consumer obtained a quote from a third party company who they had asked to review the issue. We passed the quote to the company and suggested it should pay the amount quoted to resolve the case. The company agreed and the case was closed as a mutually acceptable settlement.

20%

Service

17%

Contract issues

4%

 Equipment

1%

Security and other

“At BT we’re really proud to be able to offer our customers first class access to alternative dispute resolution. We have been using Ombudsman Services since the start and throughout we have worked collaboratively with it to resolve issues and get the best outcome. It really is a balanced approach that considers both sides of the story. Ombudsman Services’ honesty and integrity in saying it as it is, even when difficult, has been invaluable to us and we have changed process and procedure in several areas to make things better.” BT, Brenda Cooke, Customer Dispute Resolution 

Case study: Technical line fault The consumer’s telephone line developed a fault. The company could not resolve the problem, as it was located in an underground cable. The company decided to provide the telephone line over ground. It arranged for new telegraph poles to be installed to allow it to deliver the new telephone line. The company then arranged for an engineer to visit the consumer’s home to connect the line. This is where the problems started. On several occasions the company sent a fault engineer to the property, but they did not have the necessary equipment to complete the work required. The engineer informed the consumer that they needed an installation engineer – not a fault engineer. The consumer informed the company but it repeatedly sent a fault engineer. When we reviewed the complaint it seemed clear that the company needed to arrange an installation engineer. We asked the company to arrange this, and within a week the line was working. The company agreed a goodwill payment to recognise the inconvenience caused to the complainant because of the delays in completing the work.

Case study: Contract dispute The consumer said they had entered into a mobile phone contract and understood the charges would be £48 per month over the course of the 24 month contract. The company, however, stated that the cost of the contract was £48 per month for the first 12 months and £203 per month for following 12 months. We reviewed the case. The key piece of evidence was the copy of the contract which the complainant had signed. The contract stated that the cost of the service would be £48 per month. There was no reference to this being a discounted offer for a limited period or that the price would increase to £203 per month after 12 months. The contract therefore supported the complainant’s view that they had been sold the service on the basis that it would cost £48 per month over the course of the full 24 month term. We required the company to ensure the package charge was reduced to £48 per month for the final 12 months of the contract. 30 Ombudsman Services

“I am grateful for your help and the time you have taken to look into this matter.”

“I am most impressed with the service you have given me. Your correspondence has been well written and to the point, and agreement has been reached in a speedy manner. All very professional. Thank you.”

Customer testimonial

Customer testimonial

Annual report and accounts 2012/13 31


Communications at a glance

Number of communication companies

433 71,117 Number of new contacts

47%

Written contacts

53%

At the time of publication we had 433 communications companies signed up to our service. We handle complaints about a range of services, including landline telephones, broadband, WiFi, SMS texting services and satellite television. We also deal with certain other services and products for people with disabilities, including text relay and free directory enquiries.

We responded to 71,117 new communications contacts during 2012/13, an average of 284 per working day, which is similar to the previous year. The figure does not include subsequent contacts about the same case. Just over half (53%) of the consumers who contacted us for the first time used a telephone. Of the 33,763 written contacts, 79% were emails and online forms, 21% were letters and fewer than 1% were faxes.

Reasons we cannot accept a complaint about a participating company

During 2012/13 we resolved more than 10,000 communications complaints.

The complaints we resolved

31%

Resolved using early resolution and mutually acceptable settlement

The main reason we cannot accept a case about a participating company is because the consumer has not given the company a reasonable opportunity to resolve their complaint. We work with these complainants to give them advice and signpost them to the appropriate organisation.

We resolved 31% of complaints using early resolution and mutually acceptable settlement. This is where we contact both parties, preferably by phone, to discuss the complaint and its resolution and try to reach agreement.

69%

Resolved following investigation

The remaining 69% of the complaints required further investigation, where we request a case file from the participating company and issue a report.

Other reasons that we cannot accept a complaint include the consumer waiting over nine months to contact us after reporting the issue to the service provider, or waiting more than 12 months to report the problem. These account for less than 1% of cases that are outside our terms of reference.

Reasons we accept a complaint Unresolved after eight weeks 81% Deadlock Ombudsman’s discretion

Telephone contacts

16% 3%

Inside and outside our terms of reference Approximately 20% of the new contacts we received during 2012/13 were within our terms of reference; the rest were outside our terms of reference. Of those contacts that were outside our terms of reference, 79% were premature and likely to return, 13% related to companies or sectors that we do not currently cover and 8% were general enquiries and literature requests.

32 Ombudsman Services

20%

Companies have eight weeks to resolve a complaint, after which their customer can complain to us. In line with previous years, the majority (81%) of complaints we accepted were because eight weeks had elapsed without resolution.

Inside terms of reference

80%

Sometimes a company provides a final response or deadlock letter, within the eight week period, which states that it will no longer be considering the complaint. The complainant can then bring their complaint to us. We accepted 16% of complaints because the company issued a deadlock letter.

Outside terms of reference

79% Premature

 13% Companies or sectors that we do not currently cover

Where appropriate, an ombudsman may use discretion to accept a complaint that is outside of our terms of reference. For example, a consumer must complain to us within nine months of first complaining to the service provider. If the complainant was unable to contact us sooner, perhaps because of serious illness, we may accept their case. We accepted 3% of complaints using ombudsman’s discretion.

 % General enquiries and 8 literature requests

Awards

Both

51%

Financial

13%

Non-financial

21%

None

15%

To resolve a complaint we can require a participating company to provide a financial award, to return the customer to the position they were in before the problem occurred or to acknowledge a shortfall in customer service. We can also require a non-financial remedy such as an apology, an explanation, a service or some practical action. If we find the company is not at fault and has acted appropriately, we may decide that no further action is required. If the complainant accepts our resolution, it is binding on the participating company, which then has 28 days to implement the remedy. During 2012/13 we required companies to provide both a financial award and a non-financial remedy in 51% of cases. We required a financial only award in 13% of cases and a non-financial only remedy in 21% of cases. We required no further action in 15% of cases. Annual report and accounts 2012/13 33


Sharing the learning

Working with participating companies We are keen to work with participating companies to tackle the issues that cause customer complaints, so we hold regular meetings with companies and publish newsletters, case studies and advice. Customer service is the most common complaint about communications suppliers, so we advise participating companies to communicate clearly with their customers and keep them informed. They should call their customers back, respond to their letters, explain if there is a delay and, importantly, do what they say they are going to do. Ombudsman Jon Lenton says: “Many cases are about a straightforward issue, perhaps a disputed bill or line fault, which escalates because the issue is not handled effectively. When the case reaches us, we not only try to resolve the complaint quickly, we try to explain how it could have been resolved earlier, before reaching us.”

Working with the regulator We have regular meetings with Ofcom to highlight trends and issues, to discuss performance and to give updates on changes to our business. We liaised with Ofcom on our proposals for remedy implementation, to ensure there is consistency in the way we resolve complaints. We work with participating companies to sort out systematic issues, such as failure to provide remedies or the querying of case acceptances. If the issues persist we report the company to the regulator. Responding to consultations During 2012/13 we responded to five consultations that related to the communications industry. For example, when Ofcom proposed a set of measures to make changing broadband and landline providers simpler and more reliable, it was our view that the proposals would effectively tackle a number of switching issues, but not all.

“Many cases are about a straightforward issue, perhaps a disputed bill or line fault, which escalates because the issue is not handled effectively. When the case reaches us, we not only try to resolve the complaint quickly, we try to explain how it could have been resolved earlier, before reaching us”

34 Ombudsman Services

We also provided comments on the communications consumer panel draft work plan for the 2012/13 financial year. Policy Manager Mark Glover says: “The panel had concerns that consumers may not have the skills, confidence, time or persistence to pursue their complaints. We explained that the process and infrastructure we have developed overcomes this issue; our contact centre and literature are easy to use and accessible, and help to level the playing field between consumers and participating companies.”

In the media We work with to the media to promote our message to consumers. Our coverage included a Moneywise magazine article on how to complain about fixed price phone contracts and a Computer Active article on phone complaints. We are often invited on regional radio shows to talk about communications complaints and answer callers’ questions.

Ombudsman Jon Lenton spoke on BBC Radio York about switching complaints. He explained that companies are required to inform their customers of any transfer requests, he talked about the minimum standards of customer service required of suppliers and he explained when and how complainants should contact Ombudsman Services.

Jon says: “It is great we have the opportunity to comment on topical issues and help a wide audience understand what they are entitled to.”

Case studies We handled an enquiry about a student who had his subscriber identity module (SIM card) stolen while charging his phone at school. The student told us he hadn’t noticed the theft until a month later when he received a high bill. After investigating the case, we found that the student was liable for the bill because he hadn’t reported the incident to his communications provider within 24 hours, which his contract required. To help other consumers avoid similar situations, we published a ‘school boy error’ case study on our website. During one of the wettest summers on record, we urged consumers to take care when using their mobiles abroad. We published a directory of dangers to help consumers avoid being hit with unexpectedly high bills, by knowing how to use their phone abroad and understanding the costs involved.

“BSkyB has been affiliated to Ombudsman Services since its inception as Otelo. In that time there has been extensive growth across the communications sector and ever-increasing complexity in terms of products and choice available to consumers. The industry has embraced these changes and Ombudsman Service has moved with it, supporting consumers, maintaining close engagement with its participating companies and providing an independent view based on common sense and fairness.”

Director of Policy and Communications Susan Fox explains: “We wanted to warn people of the dangers of data consumption, as many people don’t realise how much data they use when downloading music or video content.”

BSkyB, Alistair Hosie, Operational Compliance Manager

Annual report and accounts 2012/13 35


Energy

36 Ombudsman Services

We resolve complaints from consumers about energy (gas and electricity) companies. We are approved by Ofgem, the UK gas and electricity regulator, under the Consumers Estate Agents and Redress Act 2008.

8,768

complaints resolved in 2012/13

Annual report and accounts 2012/13 37


Energy overview

Record year for energy complaints We handled a record number of energy complaints during 2012/13, resolving 8,768 complaints, 33% more than the previous year. Chief Ombudsman Lewis Shand Smith says: “The rise in complaints is no surprise given the widely publicised issues in the energy industry and greater understanding of what to do if things go wrong. We are actively supporting solutions to improve complaint handling and hope to see the number of complaints decrease.” The energy industry While news of energy price rises and regulatory fines cannot be ignored, the industry has taken some positive steps to improve the market for consumers. During 2012/13 we welcomed Ofgem’s proposals to reform the industry, to enable customers to better understand what is on offer and more easily choose the right supplier and best deal for them.

We also submitted a detailed response to the regulator’s retail market review, which proposed to extend the protection that is currently afforded to micro businesses to small businesses. Lewis says: “We welcome the simplification of tariffs for domestic customers and share Ofgem’s view that it is important that small businesses are able to access independent redress outside the court process that is both quick and cost effective. We were pleased to have our contribution recognised – the retail market review proposals document stated we had been ‘very useful in identifying the key issues’.” In addition to these reforms, we have been working with Ofgem to understand the proposed new licence conditions that stem from its voluntary standards of conduct. We look at supplier responsibilities as a matter of course so the new conditions are unlikely to cause an increase in complaints. Ombudsman Debra Vaughan-Massey explains: “Regardless of whether standards of conduct are expected or required, we always take the principles of customer service and best practice into consideration when we look at complaints.”

“The rise in complaints is no surprise given the widely publicised issues in the energy industry and greater understanding of what to do if things go wrong. We are actively supporting solutions to improve complaint handling and hope to see the number of complaints decrease” 38 Ombudsman Services

This is often found when the recorded contract script is read so fast that it is almost impossible to determine what details are included in the contract. Suppliers rely on the information provided by the broker to set up the contract and often that is a short call recording. Some suppliers will renegotiate or release contracts if it is clear a customer is unhappy with the actions of the broker but greater awareness of the sales chat before the recording and the speed of delivery is needed

Trends Energy companies are getting better at applying the billing code to ensure consumers receive fair treatment. As a general rule, the domestic back billing code prevents suppliers from billing a consumer for previously unbilled energy more than a year old if a catch up bill is issued because of supplier fault. Domestic back billing complaints remain at a steady level but the nature of these complaints has changed. Debra explains: “Consumers usually bring their complaint to us because they disagree with the supplier’s decision that the code does not apply; they feel the code has been applied incorrectly or they simply want money in the hand rather than charges withdrawn. More often than not, the supplier has already taken into consideration the back billing code and withdrawn charges if appropriate. Compliance with the code is high so our investigations look at nuances that we can feed back to Energy UK and the companies, to help develop the code further. We hope to play a similar role in the development of the micro business back billing code.”

We have alerted Trading Standards to the issue and are working with Ofgem and participating companies to see what can be done.

Unless a provider takes responsibility for the broker’s actions, there is no protection for the consumer. Debra says: “We strongly encourage companies to move away from brokers they cannot trust as it impacts on their reputation.” We have also seen more claims management companies target energy consumers, offering to ‘win compensation’ from energy suppliers for a fee. Consumers have a right to free, independent redress and we actively discourage them from paying for such services.

When we became aware of the issue we published a statement on our website and used Twitter to alert consumers to the fact that redress is free. Our chief ombudsman talked about the issue on regional radio, dismissing the claim that most consumers are ‘entitled’ to compensation, as some claims companies suggest. We have asked energy suppliers to spread the message that redress is free and to signpost consumers to us if they are unable to resolve their complaint. We have also raised the issue with our consumer liaison panel.

The Green Deal In 2012 we won the bid to provide the ombudsman and investigation service for the government’s new Green Deal initiative. The Green Deal enables homeowners and businesses to implement energy efficiency improvements at little or no upfront cost, with payment recouped through customers’ energy bills. We are able to handle complaints about Green Deal providers who include energy suppliers, construction groups and installers. We can also handle complaints about property sellers or landlords who fail to disclose key information about Green Deal plans. Ombudsman John Baguley has been responsible for introducing the Green Deal to our service and managing the relationship with key stakeholders. John says: “The Green Deal complements our energy and property services. We have a good understanding of the industries and working closely with providers, assessors and installers will give us even better knowledge.”

Emerging issues Sometimes energy suppliers use independent brokers to sell their contracts. They are responsible for the broker and any complaints about it. We have noticed an increase in complaints about authorised broker sales.

The Green Deal will help us to build stronger relationships with our working partners. As part of the scheme, we are liaising closely with the oversight body Gemserv and the Financial Ombudsman Service, which will look at the consumer credit aspect of any Green Deal complaints. Many Green Deal providers are smaller companies that do not know how we work. Even the ‘big six’ suppliers have specific Green Deal departments that we may not have dealt with before. We have been running workshops to advise on handling complaints and to explain our role.

A common complaint is that the recorded part of a phone sale only includes enough information to demonstrate acceptance of the contract. Yet complainants say offers or information discussed and agreed before the recording are not included in the contract.

John adds: “As with any new service, we will learn from the complaints we handle and use this knowledge to help companies improve and to manage the expectations of consumers.”

Annual report and accounts 2012/13 39


Energy complaint types

Billing

Networks

Billing continues to be the biggest cause of energy complaints. More than 81% of the complaints we resolved in 2012/13 related to billing issues such as disputed charges, back billing and inaccurate invoices.

Almost a third of network complaints (29%) relate to the provision and cost of connections. Complainants see the amount of work done and question the need for two or more engineers, the time taken and the materials needed for what they perceive as a simple task. We can explain about the safety requirements and, if provided, we can describe the work done without the need for providing sensitive financial information. Our biggest hurdle is trying to explain the charges when the information available about the work carried out is limited. Often complainants just need an independent party to explain what work was done and reassure them that the charges are reasonable. If we cannot be sure that the charges are reasonable, given the description of the work, then we may ask the company to refund some of the charges.

Billing errors that occur after meter exchanges are a common cause of billing complaints. If a supplier does not update industry records when a meter is exchanged, actual readings may be disregarded because they do not fall in line with previous readings recorded against the old meter. Without further investigation, suppliers will use estimated readings and, with the increase in supply transfer, the account quickly becomes complicated. As the industry moves towards mass roll out of smart meters, a smooth process for meter exchanges and record updates is essential to maintain a high standard of billing accuracy. Sales Thanks to work by Ofgem, Energy UK and participating companies, domestic energy sales generate very few complaints. Complaints about mis-selling accounted for 5% of the energy complaints we handled in 2012/13.

“My complaint has been dealt with efficiently and with minimum hassle to me.” Customer testimonial

40 Ombudsman Services

Feed-in tariffs (FITs) Common complaints about feed-in tariffs (FITs) are about the rate applied by the FIT licensee (the company) and the eligibility date. The rules surrounding eligibility and the rate applied are strict and we cannot require FIT licensees to bend

the rules for the complainants (the generators). While many of the complaints fall outside of our terms of reference and it may seem that we cannot help, the initial contact with us can help the complainant understand why the licensees cannot change the eligibility date.

Complaint types

81%

Billing

10%

Transfer

Rather than a licensee allowing a complaint to continue, they can direct complainants to our website for an independent view of what is a fair and reasonable approach to a common complaint.

5%

Generators need to be aware of their responsibility to ensure all relevant documentation is included with an application and check that posted applications are sent by a signed for delivery method. Providing they have done this, a licensee will apply the correct tariff and from the correct eligibility date. Even if there is a delay processing the application, it should not be affected if the application is properly and fully completed. We can address any shortfalls in service caused by processing delays.

2% 2%

 Sales



FITs

Case study: Network charges The consumer asked the company to connect a new supply to a business. The company described the work necessary and provided a quote. The connection turned out to be more straightforward than planned and did not require any of the work described in the quote. The consumer asked for a refund of the excess charges. Because the company was unable to explain why the quoted charges were necessary, we required it to refund the charges to bring down the cost to a more reasonable level.

Network and other

“Had it not been for the ombudsman, I would never have got the money that was owed to me. I would encourage anyone who is having problems with their energy supplier to use your services; I’m sure the system would be much fairer if more people did so.”

As the FIT scheme is well underway, we anticipate complaints in the future which will focus more on transfers to other licensees.

Customer testimonial

Case study: FIT application The consumer complained that the company did not process an application until after the deadline for the higher rate FIT. The company did not receive the application until after the deadline.

Case study: Exchanged meter The consumer’s meter was exchanged but the company sent an estimated bill based on the old meter readings. When it received an actual reading from the new meter some time later, the company re-billed the account generating a significant credit balance. The company did not have a record of the meter exchange and industry records had not been updated so it did not investigate the reading. The consumer declined a refund and asked for the charges to remain on the account to cover ongoing usage. When the company identified that the meter had been exchanged, its updated bill generated a significant debt. The back billing code protected the customer from this debt but we required an additional goodwill payment for the failures in managing the account.

We investigated the complaint because the consumer claimed to have proof of delivery. They also complained that the company had not registered a second set of solar panels. The consumer was unable to provide any paperwork for the first set of solar panels so we maintained the company’s position that eligibility was after the deadline, as shown by the logged receipt of the application. However, we identified that the company logged receipt of an application for a second set of solar panels and it failed to act on the information. The company confirmed it had lost the application. Following investigation the company agreed to honour the receipt date for the second set once the consumer resubmitted the appropriate documentation.

Case study: Mis-selling The consumer purchased a contract by an agent representing the participating company. The consumer complained that the contract was mis-sold but the company maintained it was a valid contract. We listened to the contract call and determined that the speed of delivery was so fast that it was impossible for the consumer to have been certain what they were agreeing to. The consumer expressed concern about the speed during the call but the agent did not slow down delivery. In the case file, we noted that the sales agent referred to a discussion that took place before the call recording; it was not clear what that discussion was about. We concluded that the key terms of the contract could not be determined. The company agreed to release the customer from the contract. “Ombudsman Services is not just a complaint handling service, but an important extension to the internal analysis work we conduct to understand why customers need to escalate to third parties and what we could have done better to resolve their issues. We integrate the feedback received on each case with our own findings to determine improvements to our business processes. As a progressive organisation, Ombudsman Services has worked with suppliers over the years to better understand the complexity of our industry and provide a professional service for both consumers and companies.” Scottish Power, Grant Tierney, External Relationship Manager Annual report and accounts 2012/13 41


Energy at a glance

56

At the time of publication we had 56 energy companies signed up to our service. We handle complaints about a range of services, including gas and electricity billing, switching, selling and supply.

47,477

We responded to 47,477 new energy contacts during 2012/13, an average of 190 per working day. This is 16% more than the previous year. The figure does not include subsequent contacts about the same case.

Number of energy companies

Number of new contacts

51%

Written contacts

49%

Telephone contacts

We also had 48 Green Deal providers signed up to our service.

Just under half (49%) of the consumers who contacted us for the first time used a telephone. Of the 24,101 written contacts, 76% were emails and online forms, 23% were letters and fewer than 1% were faxes.

During 2012/13 we resolved 8,768 energy complaints, 33% more than the previous year.

The complaints we resolved

Reasons we cannot accept a complaint about a participating company

38%

Resolved using early resolution and mutually acceptable settlement

The main reason we cannot accept a case about a participating company is because the consumer has not given the company a reasonable opportunity to resolve their complaint. We work with these complainants to give them advice and signpost them to the appropriate organisation.

We resolved 38% of complaints using early resolution and mutually acceptable settlement. This is where we contact both parties, preferably by phone, to discuss the complaint and its resolution and try to reach agreement.

62%

Resolved following investigation

The remaining 62% of the complaints required further investigation, where we request a case file from the participating company and issue a report.

Other reasons that we cannot accept a complaint include the consumer waiting over nine months to contact us after reporting the issue to the service provider, or waiting more than 12 months to report the problem. These account for less than 1% of cases that are outside our terms of reference.

Reasons for accepting a complaint 2012/13 Unresolved after eight weeks 72% Deadlock Ombudsman’s discretion

24% 4%

Inside and outside our terms of reference Approximately 24% of the new contacts we received during 2012/13 were within our terms of reference; the rest were outside our terms of reference. Of those contacts that were outside our terms of reference, 91% were premature and likely to return, 4% related to companies or sectors that we do not currently cover and 5% were general enquiries and literature requests.

42 Ombudsman Services

24%

Inside terms of reference

Companies have eight weeks to resolve a complaint, after which their customer can complain to us. In line with previous years, the majority (72%) of complaints we accepted were because eight weeks had elapsed without resolution.

76%

Sometimes a company provides a final response or deadlock letter, within the eight week period, which states that it will no longer be considering the complaint. The complainant can then bring their complaint to us. We accepted 24% of complaints because the company issued a deadlock letter.

Outside terms of reference

91% Premature

 4% Companies or sectors that we do not currently cover

Where appropriate, an ombudsman may use discretion to accept a complaint that is outside of our terms of reference. For example, a consumer must complain to us within nine months of first complaining to the service provider. If the complainant was unable to contact us sooner, perhaps because of serious illness, we may accept their case. We accepted 4% of complaints using ombudsman’s discretion.

 % General enquiries and 5 literature requests

Awards

Both

61%

Financial

10%

Non-financial

22%

None

7%

To resolve a complaint we can require a participating company to provide a financial award, to return the customer to the position they were in before the problem occurred or to acknowledge a shortfall in customer service. We can also require a non-financial remedy such as an apology, an explanation, a service or some practical action. If we find the company is not at fault and has acted appropriately, we may decide that no further action is required. If the complainant accepts our resolution, it is binding on the participating company, which then has 28 days to implement the remedy. During 2012/13 we required companies to provide both a financial award and a non-financial remedy in 61% of cases. We required a financial only award in 10% of cases and a non-financial only remedy in 22% of cases. We required no further action in 7% of cases. Annual report and accounts 2012/13 43


Sharing the learning

Working with participating companies The energy liaison panel met six times during 2012/13. Members discussed changes to ombudsman processes, energy policy, the Green Deal and emerging issues such as claims management companies and the increase in broker complaints. We gave updates from the meetings and conferences we attended and discussed plans to publish more of our data, including naming energy companies. Relationship Manager Sue Jackson says: “The sector liaison panel meetings are beneficial to all who attend. They ensure everyone is aware of developments in the industry and they help us to understand how these developments are likely to impact on different energy companies and their customers.” We have regular meetings with energy companies to raise issues and to give advice. We gave a talk to one company’s lawyers and regulatory staff about the development, role and powers of the ombudsman, and we have met with other companies to discuss cases and to propose solutions to systematic problems.

Sue adds: “Companies appreciate this level of interaction. We give advice about improving complaint handling and get feedback on our own processes.” Working with the regulator We have regular meetings with Ofgem to discuss performance, to give updates on business changes and to share knowledge of complaints in the UK and Europe. Chief Ombudsman Lewis Shand Smith says: “It is pleasing to report that we have consistently achieved targets set by the regulator. We add value as a member of the National Energy Ombudsman Network (NEON) by sharing what we learn from energy ombudsman services in other countries. Like us, Ofgem is keen to understand the drivers of complaints and any barriers to complaining, which we can feed back to companies.” Events and conferences Stakeholder events and conferences give us the opportunity to contribute to energy policy and share our expertise on consumer redress. In March 2013 we attended the European Consumer Summit in Brussels to discuss the enforcement of consumer law.

“The sector liaison panel meetings are beneficial to all who attend. They ensure everyone is aware of developments in the industry”

44 Ombudsman Services

The energy sector was seen as an example of good practice in protecting consumer rights and the UK was considered best practice in ensuring redress. We gave a presentation on how public bodies and ombudsmen can work together to ensure that regulations are enforced. We also highlighted that publishing data could drive positive behaviours and this was welcomed as an innovative approach to enforcement.

In our response to Ofgem’s consultation on vulnerable consumers, we supported broadening the definition of ‘vulnerable’. We also suggested that the regulator’s work plan should take account of the work that the Directorate General for Health and Consumers (DG SANCO), the Council of European Energy Regulators (CEER) and the European consumer organisation BEUC are undertaking in this area.

We have regular interaction with Energy UK, the trade association for the energy industry, and have supported its work on developing new sales and billing codes. At the Energy UK annual billing code stakeholder event, attended by the Department of Energy and Climate Change (DECC), Ofgem, Consumer Focus and energy companies, we commented on issues and answered questions.

When Ofgem called for evidence on supplier guaranteed and overall standards of performance, we commented that guaranteed standards may prove relevant and useful for domestic consumers. However, given the level of compensation and the capping of the compensation, we believe they may provide little use to business users.

In the media We provided stories and comments to the media on topical issues, such as faulty meters and back billing. In September 2012 Rip Off Britain told the story of a complainant who had received a back bill of over £8,000. We had investigated the case and required the energy company to correctly apply the back billing code to reduce the outstanding amount, to apologise for the shortfalls in customer service and to pay a goodwill award for the stress and inconvenience caused.

“In the last five years the customer journey within E.ON has been improved thanks to the support of Ombudsman Services. The organisation’s continued help has assisted us in improving the service we give to our customers and helped enact change in our systems and the way we work. We look forward to the next 10 years of working with the Ombudsman Services and wish it a happy birthday from all at E.ON.” E.ON, Anna Castellano, Head of Customer Complaints Resolution

We also publish anonymous case summaries on our website and advice, often about complaining, switching or cutting utility bills, so that consumers learn from the experience of others.

Ombudsman Debra Vaughan-Massey says: “Ombudsman Services was mentioned in the majority of the presentations and it was clear that the work we do with Energy UK has helped to influence the direction of the code.” Responding to consultations During 2012/13 we responded to nine consultations that relate to the energy industry, including the DECC consultations on the Green Deal and feed-in tariffs. In our response to Ofgem’s consultation on a smart meter installation code of practice, we emphasised the need to manage the roll out of smart meters effectively and agreed that a code and transparent process would help to achieve this.

Annual report and accounts 2012/13 45


Property

46 Ombudsman Services

We resolve complaints from consumers about chartered surveying companies, surveyors, estate agents, residential managing agents, letting agents and other property professionals. Appointed by the Royal Institution of Chartered Surveyors (RICS) as the ombudsman for chartered surveyors, we are also approved by the Office of Fair Trading (OFT) as an estate agents redress scheme.

589

complaints resolved in 2012/13

Annual report and accounts 2012/13 47


Property overview

Improving standards in the property market We resolved 27% more property complaints in 2012/13 compared to the previous year. This is partly because more companies are signed up to the service and more people are aware of Ombudsman Services and what we can do. Chief Ombudsman Lewis Shand Smith says: “We raise awareness of our scheme and explain redress so that consumers know when and how to contact us. The fact that more companies have signed up to our service is good for consumers. We offer redress for the range of services provided by property firms so a consumer has one place to go if they have a complaint.” The property industry The regulation of the lettings industry continued to be a key talking point in the media and in parliament during 2012/13. The amendment to the enterprise and regulatory reform bill, supported by us, the Royal Institution of Chartered Surveyors (RICS) and other industry and consumer bodies, will require all agents to be members of an ombudsman scheme. Many lettings agents are not members of a redress scheme, which means their customers have no protection if things go wrong. Lewis says: “Protection for consumers in the lettings market is patchy, which in turn leads to confusion. Those buying and selling residential properties are protected and have access to redress, while those renting in the private sector do not.

48 Ombudsman Services

“We welcome the amendment to the bill, which will require all letting agents to be members of an ombudsman scheme. “Landlords and tenants deserve high quality standards and the assurance that if things go wrong the ombudsman is there to help. We are offering exclusive rates to members of National Approved Letting Scheme (NALS) to encourage more NALS registered firms to choose us as their approved dispute resolution scheme.” Ombudsman John Baguley adds: “There is greater consumer awareness of the dangers of using unregulated agents and more companies are willing to show their commitment to customer care by signing up to a redress scheme.”

Emerging issues

Expanding remit

During 2012/13 the Department of Business and Innovation (BIS) ran a consultation about amending the Estate Agency Act (EAA), which referred to methods of selling property and intermediary agents. We commented on the proposals and highlighted the need for a balance between opening up the market and protecting consumers’ rights.

We welcomed over 200 new property companies during 2012/13, including large London estate agency Winkworth and members of NALS. We have made significant progress in expanding our portfolio and have been playing our part to raise standards in the industry, offering complaint resolution to home buyers, sellers, landlords and tenants.

John explains: “Belonging to an independent redress scheme like ours would give consumers the confidence to do business with intermediary agents and would provide companies and consumers with a cheaper and quicker means of resolving complaints than the courts.”

We have also diversified into new areas of property complaints. From April 2013 we began working with Peverel Retirement and Peverel Scotland. Both companies specialise in property management for leasehold retirement properties in the non-registered retirement sector; they manage some 1,650 retirement developments. We have also been appointed by Capita to provide a dispute resolution service for its new scheme, Capita Tenancy Deposit Protection.

Trends The different types of homebuyer reports continue to cause confusion amongst consumers. We advise consumers to be clear about what they are getting and to use a RICS registered surveyor or one that offers independent redress.

John says: “These are great examples of how we can apply our existing knowledge and expertise to new areas within the property sector, providing the comfort of independent redress should something go wrong.”

“There is greater consumer awareness of the dangers of using unregulated agents and more companies are willing to show their commitment to customer care by signing up to a redress scheme”

Annual report and accounts 2012/13 49


Property complaint types

Surveying complaints The majority of property complaints we handle are about surveyors failing to spot defects. This is no surprise given that surveyors make up 94% of our property companies. Often a consumer buys a property, finds a defect some time later and contends the surveyor had a duty to report the defect and owes them money. Unlike our other sectors, we have to look back in time and, using the information available, determine whether the defect was visible, whether it should have been reported within the type of report and, if so, the extent of the loss. Ombudsman John Baguley explains: “The survey report is a report on the condition at the date of the inspection and the extent of inspection is dictated by the terms and conditions of the type of report. A degree of confusion remains between the various types of reports and sometimes customer expectation is too great. “It is often necessary to explain this and the basis of our awards. While we are not a court, we have regard to court rules which use diminution in value (DMV) to decide the awards on surveying cases. DMV is the extent by which value was affected on the date of purchase by the defect. Even if we agree with the complainant, the award may be less than the cost of rectifying the defect. This is because value has not been affected by as much as is the cost of putting the matter right.”

50 Ombudsman Services

Estate agency and letting complaints

Complaint types

Estate and letting agency complaints relate to the way in which the agent performed relative to the terms of appointment, the relevant legal requirements and codes of conduct. In many cases the tenants believe the agent is responsible when repairs are required but the agent can only act on the instruction of the landlord.

60%

Case study: Homebuyer survey and valuation The consumer complained about a defective flat roof that started to leak shortly after moving in to the property. The time between the inspection and the complaint was relatively short. From the information presented, it was clear that the flat roof would have been entirely visible when the surveyor inspected the house. It was also clear that, when the surveyor inspected the roof, it would have been in such a poor condition that significant work was required. The survey report said little other than confirming that the property had a flat roof. The cost of renewing the roof was considerable. We concluded that the survey report fell short of the standard expected and we made an award equal to the full cost of works.

“Ombudsman Services continues to help us improve the service we provide to our customers, by providing an efficient and thorough investigation of complaints.”

Survey and valuation

Peverel Property Management, Gerry Fox, Head of Compliance

13%

Property management – landlords and tenants

Residential managing agent

8% 5%

Auction and other

3%

After moving in to a property, the tenant found that several carpets were infested with insects. The tenant raised the issue with the lettings agent and the agent informed the landlord. The landlord acted and instructed specialist contractors. However, a delay of 48 hours occurred. It transpired that it was the landlord who delayed instructing the cleaner. The tenant also requested a new carpet but this did not happen because the cleaning company confirmed that, following the cleaning, the carpet was free from infestation. They complained to us about the letting agent. We considered the contract between the agent and landlord, as well the agent’s obligations to the tenant. While the agent had a duty to notify the landlord of the problem, responsibility to instruct works and/or provide a new carpet lay with the landlord. Our investigation revealed that the agent had contacted the landlord as soon as it knew of the problem and had also contacted the landlord during the 48 hours, at the tenant’s request, to investigate why the contractors had not arrived. We concluded that the agent had performed correctly and did not make an award. The agent notified the landlord and responded to further queries. The carpet could only be replaced if the landlord agreed and it was not the agent who was at fault when the landlord rejected the request.

11%

Residential sales

Case study: Lettings

“We feel it is important to provide our customers with an independent option in the event of dispute. We believe our participation in the scheme is an indication of our commitment to quality and transparency.”

Professional advice

“Thank you for your patience and persistence. It has made a great deal of difference to my morale and motivation to see this matter through.”

e.surv Chartered Surveyors, Richard Sexton, Director of Business Development

Customer testimonial

“The majority of property complaints we handle are about surveyors failing to spot defects. This is no surprise given that surveyors make up 94% of our property companies”

Annual report and accounts 2012/13 51


Property at a glance

Number of property companies

7,939 3,940 Number of new contacts

54%

Written contacts

46%

At the time of publication we had 7,939 property companies signed up to our service. We handle complaints about a range of services, including chartered surveyors, surveyors, estate agents, residential managing or letting agents and valuers. We responded to 3,940 new property contacts during 2012/13, an average of 16 per working day, which is similar to the previous year. The figure does not include subsequent contacts about the same case. Just under half (46%) of the consumers who contacted us for the first time used a telephone. Of the 2,118 written contacts, 72% were emails and online forms, 27% were letters and fewer than 1% were faxes.

Reasons we cannot accept a complaint about a participating company

During 2012/13 we resolved 589 property complaints, 27% more than the previous year.

The complaints we resolved

6%

The main reason we cannot accept a case about a participating company is because the consumer has not given the company a reasonable opportunity to resolve their complaint. We work with these complainants to give them advice and signpost them to the appropriate organisation.

Resolved using early resolution and mutually acceptable settlement

We resolved 6% of complaints using early resolution and mutually acceptable settlement. This is where we contact both parties, preferably by phone, to discuss the complaint and its resolution and try to reach agreement.

94%

Resolved following investigation

The remaining 94% of the complaints required further investigation, where we request a case file from the participating company and issue a report.

Other reasons that we cannot accept a complaint include the consumer waiting over nine months to contact us after reporting the issue to the service provider, or waiting more than 12 months to report the problem. These account for less than 1% of cases that are outside our terms of reference.

Telephone contacts Reasons for accepting a complaint 2012/13 Unresolved after eight weeks 75%

Inside and outside our terms of reference Approximately 18% of the new contacts we received during 2012/13 were within our terms of reference; the rest were outside our terms of reference. Of those contacts that were outside our terms of reference, 44% were premature and likely to return, 43% related to companies or sectors that we do not currently cover and 13% were general enquiries and literature requests.

52 Ombudsman Services

Deadlock

18%

Ombudsman’s discretion

19% 6%

Inside terms of reference

82%

Outside terms of reference

44% Premature

The main reason we cannot accept a case about a participating company is because the consumer has not given the company a reasonable opportunity to resolve their complaint. We work with these complainants to give them advice and signpost them to the appropriate organisation.

 43% Companies or sectors that we do not currently cover

Other reasons that we cannot accept a complaint include the consumer waiting over nine months to contact us after reporting the issue to the service provider, or waiting more than 12 months to report the problem. These account for less than 1% of cases that are outside our terms of reference.

 3% General enquiries and 1 literature requests

Awards

Both

28%

Financial

33%

Non-financial

None

9% 30%

To resolve a complaint we can require a participating company to provide a financial award, to return the customer to the position they were in before the problem occurred or to acknowledge a shortfall in customer service. We can also require a non-financial remedy such as an apology, an explanation, a service or some practical action. If we find the company is not at fault and has acted appropriately, we may decide that no further action is required. If the complainant accepts our resolution, it is binding on the participating company, which then has 28 days to implement the remedy. During 2012/13 we required companies to provide both a financial award and a non-financial remedy in 28% of cases. We required a financial only award in 33% of cases and a non-financial only remedy in 9% of cases. We required no further action in 30% of cases. Annual report and accounts 2012/13 53


Sharing the learning

Working with participating companies We have continued to work closely with the Royal Institution of Chartered Surveyors (RICS) to keep up to speed with changes in the industry. Every year we attend the RICS residential board meetings in England and Scotland and we have meetings in between to discuss regulation and ensure that our knowledge is up to date.

We share the learning with our participating companies through property liaison panel meetings and sector newsletters. The panel met twice during 2012/13 to discuss changes to processes, consumer policy and lessons learned from conferences and events. Events and conferences Chief Ombudsman Lewis Shand Smith was interviewed following the RICS roundtable on standards in the private rented sector.

“RICS has recently introduced several new products, including a condition survey and a standard building survey template. It is important that we understand the difference between these products and services so that we can make informed decisions. We also inform RICS about issues that it may need to be aware of, to help the profession and its members” Ombudsman John Baguley says: “RICS has recently introduced several new products, including a condition survey and a standard building survey template. It is important that we understand the difference between these products and services so that we can make informed decisions. We also inform RICS about issues that it may need to be aware of, to help the profession and its members.”

54 Ombudsman Services

He discussed the need for cohesion with the sector and the interview was broadcast on YouTube. Lewis was also interviewed at the National Approved Letting Scheme (NALS) annual conference in London for its media channel on YouTube, which we promoted on Twitter. He talked about the importance of the NALS conference in the industry calendar and how we are working with NALS to bring down the cost of compliance. Lewis and John Baguley attended the RICS Scotland annual conference to explain the role of Ombudsman Services.

We also provided some tricks to ensure a house purchase ends up being a treat. The story received 700 hits on the website.

Responding to consultations We responded to four property industry consultations, including the proposed changes to the Estate Agents Act (EAA), the Office of Fair Trading (OFT) consultation on estate agents and the Association of Residential Managing Agents (ARMA) consultation on the regulation of its members.

Another case study concerned a consumer who contacted us on behalf of 48 residents to complain about a property firm. If we had investigated each complaint individually it would have cost 48 case fees and taken longer to reach a resolution. Instead, we sought authorisation from all the residents for one resident to accept a resolution in full and final settlement on their behalf. This flexible approach was more efficient and cost effective for all parties.

The Trading Standards Institute (TSI) was appointed to take over the OFT’s consumer codes approval scheme, which ceased in April 2013, and we responded to their consultation on approval criteria for new codes. Ombudsman Services was named in the consultation as one of two recommended alternative dispute resolution schemes. We supported the proposal to open up the membership of the consumer codes, but not at the expense of continued monitoring of companies or necessary enforcement action.

Director of Policy and Communications Susan Fox says: “Our case studies draw attention to some common complaints in an interesting way. They also give us the opportunity to provide advice to consumers and companies to help prevent these complaints in the future.”

Case studies

In the media Working with the media helps us to raise awareness of our scheme and draws attention to some common consumer complaints. In October 2012 the BBC’s Don’t Get Done Get Dom programme featured a property complaint we had investigated, and highlighted the importance of purchasing the right type of survey and the limitations of the Homebuyer Survey. Estate Agent Today published a feature comparing us with the Property Ombudsman; it explained how our service is cheaper for companies that have fewer complaints. The property118.com website featured Lewis talking about opportunities for the private rented sector in the next five years.

“Thank you for your professional and fair handling of my complaint. I am very happy with the service I have received from Ombudsman Services.” Customer testimonial

Our Halloween haunted house case study was based on a real complaint. A consumer had complained that he felt a presence in a property he had planned to buy, and that the estate agent hadn’t disclosed that the house was haunted so he wanted his deposit back. In our response, we explained that if a consumer puts down a non refundable deposit to take a property off the market and does not complete the sale, the deposit can be retained by the vendor. We said it was unreasonable to pursue a complaint against an estate agent who had not disclosed the potential presence of a supernatural force, and that it would not be possible to investigate if there was a supernatural presence at the time of the viewing.

Annual report and accounts 2012/13 55


Copyright Licensing

56 Ombudsman Services

We resolve complaints about collective management organisations. These are the bodies that own or administer, on behalf of third parties, the licensing of copyright materials

Annual report and accounts 2012/13 57


Copyright Licensing overview

Collecting the societies We have expanded our copyright licensing service to take on other collective management organisations in the UK, such as Phonographic Performance Ltd (PPL), the Copyright Licensing Agency (CLA) and the Newspaper Licensing Agency (NLA). Chief Ombudsman Lewis Shand Smith says: “The value we could bring to PRS for Music members and licensees has been recognised. We are delighted that the work by the Department of Business, Innovation and Skills (BIS) and the Intellectual Property Office (IPO) now means that other collective management organisations are encouraged to provide alternative dispute resolution for their customers.” Adaptable model To enhance its code of practice, PRS for Music wanted to offer its licensees greater protection through independent dispute resolution. We knew we could adapt our complaint handling model to any industry and we began working with PRS for Music in 2009.

After demonstrating value to PRS for Music licensees, we expanded our remit to cover PRS for Music members. These are the people who own the rights to the music that is played publicly, such as artists and songwriters. Expanding remit Keen to provide redress for similar organisations in the sector, we rebranded to Ombudsman Services: Copyright Licensing. Lewis says: “Expanding to cover the other collective management organisations is a natural extension of our work. It is a simple solution for the sector and builds on our existing expertise. We are pleased to expand in areas where there is clear consumer benefit.” New codes of practice Having reviewed the copyright sector, the IPO recommended the adoption of minimum standards of service for licensees. It encouraged collective management organisations to create codes of conduct and offer their licensees independent dispute resolution.

This initiative was coordinated by the British Copyright Council, which covers most of the collective management organisations. In December 2012 BIS and UN World Intellectual Property Organisation (WIPO) hosted an event in London to launch the new codes of conduct.

All of this is underpinned in statute. The Enterprise and Regulatory Reform (ERR) Act 2013 provides the secretary of state with the power to appoint a “licensing code ombudsman” to investigate and determine copyright disputes if the collecting societies fail to provide such a facility themselves.

Lewis says: “We welcomed these codes of conduct. They clarify the standards of operation that licensees and members can expect and provide a reference point for us when resolving a complaint.

Responding to consultations

“Arriving at this stage has been interesting. Cooperation among the different parties has led to voluntary provision of independent alternative dispute resolution at no cost to the public purse. It’s a modern model that provides quality consumer protection in an easy and cost-effective way.

We supported the principles included within the Phonographic Performance Limited (PPL) consultation on its code of conduct. We liked the way that the code explained the steps in making a complaint and the fact that it provided contact details to avoid confusion. We made some suggestions to strengthen PPL’s complaints process.

We welcomed the development of codes of conduct in the copyright sector and offered our own experience to help shape those codes.

“This is good news for consumers, licensees and members, as there will be an independent review of unresolved complaints and collective management organisations will be visibly accountable for how they treat their stakeholders.”

We also welcomed PRS for Music’s commitment to being transparent and to dealing with its members fairly and honestly. In our response to the PRS for Music consultation, we supported commitments to keeping members informed of key decisions and the emphasis on service standards for both members and licensees. In response to the IPO’s consultation on mediation, we supported the general approach but pointed out that mediation is only one way of resolving disputes. We suggested that each case should be considered on its merits and an appropriate method of resolution chosen.

Case study: Royalties A consumer complained that a third party was making a false claim for a recording on which they held the copyright. The member raised a dispute with the collective management organisation (CMO) and was told that if the claim was upheld, it would remove the third party from the work and issue a backdated payment for the royalties due. The CMO ruled in the member’s favour but explained that it would only make an adjustment from the date the member raised the dispute. After unsuccessfully challenging this, the member contacted us. We explained that it is not within our remit to review the CMO’s business, operations or policy. However we were able to consider the allegations of misinformation and poor customer service. The available evidence indicated that the CMO responded to the complaint reasonably. We accepted that the consumer was not happy with the CMO’s response, but this does not mean it was incorrect. We did not require the CMO to provide an award or remedy. 58 Ombudsman Services

Working with the industry We have worked with the IPO to discuss our role as ombudsman for the sector, and have attended copyright licensing meetings to give an overview of our service and how we work We also took advantage of The Trading Standards Institute conference to network with collective management and other organisations to discuss consumer affairs issues.

“This is good news for consumers, licensees and members, as there will be an independent review of unresolved complaints and collective management organisations will be visibly accountable for how they treat their stakeholders” Case study: Description of premises A licensee reviewed his collective management organisation (CMO) invoices for the previous six years and noticed inaccuracies in the way his premises, a public house, was described and billed. The invoices showed an excessive estimation of the capacity for the venue and the number of functions held. The licensee contacted the CMO to ask for a refund of the overpayments. The CMO explained that it calculated invoices using declarations from the various licensees; if there was an issue then it should have been raised at the time. Unhappy with the response, the complainant instructed a solicitor to look into the matter. The solicitor contacted us. We considered that the CMO acted reasonably in producing invoices based on the information it received from the licensees. We accepted that the CMO could have questioned the variances in capacity earlier, and arranged for a music licensing manager to visit the premises and verify the description. We required the CMO to provide a goodwill payment for this shortfall in customer service. Once the correct capacity was established, we were satisfied with the way the CMO recalculated its invoices and the refund it provided to the complainant. The complainant wanted the CMO to reimburse his legal fees but he could have done more to resolve the complaint himself. If he was unable to reach an agreement with the CMO, he could have contacted us for free.

Annual report and accounts 2012/13 59


Board report

60 Ombudsman Services

• The directors’ report • Customer satisfaction research • Service complaints • Report of the Independent Assessor

Annual report and accounts 2012/13 61


The directors’ report

Overview Over the past 12 months the Ombudsman Services board has worked hard to ensure that the company continues to provide an ever-improving service to consumers and participating companies. Our reputation for providing swift and fair redress, for ensuring that lessons from our activities are fed back to the sectors in which we work and for contributing constructive, practical ideas to wider public policy debate has been enhanced over the last year as a result of our success in managing our core business and taking on new responsibilities. The board has led the organisation through a variety of changes to enhance our services and ensure that we are well positioned for further growth in the future, as companies and legislators alike anticipate alternative dispute resolution services being available for more consumers than ever before. New ways of working have been introduced to enhance the experience for customers. In addition, significant progress in internal efficiency has been realised and Ombudsman Services has been successful in attracting new business sectors and participating companies to sign up to its alternative dispute resolution scheme. To support the company, the board has reviewed the governance arrangements to ensure that they remain robust. It has also developed a new financial and performance reporting framework. Looking to the future, the board has developed a new business strategy. This strategy sets out the vision for the growth of the company in a manner that is sustainable and ensures that customers will continue to receive excellent customer service. 62 Ombudsman Services

The directors have pleasure in presenting their report and the financial statements of the company for the year ended 31 March 2013. Principal activities and business review The principal activity of the company during the year has been to receive enquiries and to investigate and make decisions relating to complaints brought to us by our participating companies’ customers. The Ombudsman Service Ltd runs four separate ombudsman schemes. These are listed below: • Ombudsman Services: Communications • Ombudsman Services: Energy • Ombudsman Services: Property • Ombudsman Services: Copyright Licensing Every year, Ombudsman Services publishes an annual report from the Ombudsman providing a comprehensive review of the case activity in each sector. This report can be accessed by logging onto our website at www.ombudsman-services.org. Results The surplus for the year, after taxation, amounted to £73,030. Risk The board’s approach to risk management aims to balance risk and proportionality. It applies reasoned judgement and consideration of likelihood and impact, and balances this against the cost of mitigation.

The risks are identified by the members of our executive team. The likelihood and the impact of each risk is assessed and tracked on the corporate risk register. Responsibility for control and mitigation of each risk rests with the appropriate executive team member. The register is reviewed and agreed by the board as a standing agenda item. Risks are grouped into three categories: • Operational • Financial • Reputational Our people

Health and safety

Corporate social responsibility

We are committed to safeguarding health and safety. This includes our employees, contractors working on our site and our visitors. We meet our legal obligations with the implementation of our Health and Safety Policy, setting safety objectives and implementing suitable safeguards. Health and safety is a standing agenda item on our staff consultation group. We have had one reportable accident in the last five years.

We support several national charity events and our employees have identified a charity of the year for which we will hold fund raising events as well giving time to undertake community projects.

Equality and diversity

• • • • • • • • • •

Ombudsman Services is committed to treating people fairly – this is one of the criteria of being an ombudsman. The ability to recruit and retain staff from all sections of society is crucial, and our equal opportunities policy along with our flexible working practices enable this. Our people are trained to respect and understand diversity and to promote equitable and consistent treatment of customers and stakeholders. 55% of our workforce are women and 45% are men.

Ombudsman Services has a commitment to develop its people through investment in their training and skills. We recognise that the experience of our customers and stakeholders is driven by a friendly, welcoming and knowledgeable service delivered by appropriately skilled individuals. Our strong philosophy of developing and promoting from within the organisation enables us to put to good use a rich vein of experience. We value the thoughts of our people and we run an employee survey to capture what is important to them in their daily working lives. These thoughts underpin our people engagement work which aims to achieve improved performance and innovative work behaviour by individuals who feel valued and motivated. Our survey showed high levels of appreciation of the service we operate and that our employees are willing to go the extra mile for the organisation, but there is more we can do to engage with our employees. We have updated our performance and development review process to clarify expected behaviours and performance standards.

Environmental responsibility We take our environmental responsibilities seriously and are committed to ensuring that our impact on the environment is as low as possible. We recycle most of our waste paper and our flexible working policy means that our investigations staff work half their time at home, saving thousands of commuting miles each year; we also encourage the use of teleconferencing and public transport for business. We are developing an environmental management policy to better understand our environmental impact and to take actions to reduce it further.

Directors The directors who served the company during the year were as follows: Dame Janet Finch (Chair) Alex Blowers Richard Brown Sheila Button Jean Couper Clive Deadman Steven Gould Chris Kenny Walter Merricks Lewis Shand Smith

Jean Couper retired as a director on 30 June 2012. Directors’ responsibilities The directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the surplus or deficit of the company for that year.

In preparing those financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the directors are aware: • there is no relevant audit information of which the company’s auditor is unaware; and • the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. See financial statements on page 71.

Annual report and accounts 2012/13 63


Customer satisfaction research

During 2012/13 we commissioned an independent research company to run quarterly customer satisfaction research. Instead of running an annual postal survey, as used in previous years, the research company conducted telephone interviews with consumers who have contacted Ombudsman Services and used our services. There were 1,215 such interviews and the data can be interrogated by sector and by the type of service received. This has enabled more robust and detailed feedback, permitting a more finely grained analysis of our customers’ views. The feedback that we received was broadly very positive. The customer satisfaction research results will be used by our quality assurance team, which has a continuous improvement role. It will lead the next stages of our service improvement activities. Where the results were less positive, they tended to focus on the speed of resolution of complaints. We will examine this further, though during the year we consistently met the key performance indicators, set by the regulators, on speed of resolution. We will continue to explore how we set consumers’ expectations on this issue. Outcomes continue to be a key driver for customer satisfaction. An ombudsman service will always have cases that are not upheld; we will continue our work to ensure that complainants have a realistic view of potential outcomes from the beginning.

64 Ombudsman Services

Here are some highlights:

Communications

More than seven in ten (72%) respondents said they would recommend Ombudsman Services to a friend or neighbour if they had a complaint similar in nature to their own.

89% of all respondents knew what to do next after the initial contact.

Expectations

76% of respondents whose complaints we accepted were satisfied with the written clarity.

71% of respondents whose complaints we accepted were satisfied with the explanation of what to expect at start of process. 80% of respondents whose complaints we accepted said ease of using Ombudsman Services was as expected or better. 70% of all respondents said the service was as expected or better.

Timings 61% of all respondents were satisfied with the speed of the initial response on the phone. 54% of respondents whose complaints we accepted were satisfied with the speed of the process.

Service complaints

Handling complaints about us Like any organisation, we can and do make mistakes. It is particularly important for an ombudsman service that when a mistake does happen we recognise it, put things right and do all we can to make sure it does not happen again. This year we developed more systematic and robust ways of handling complaints about our service.

69% of respondents whose complaints we accepted were satisfied with the clarity on phone.

The aim is to resolve any complaint about us as quickly as possible and learn from it. We now have a three stage process, which initially involves a team manager, followed by a head of department and then, if necessary, the director of corporate services who has the authority to offer goodwill payments if appropriate. If a complainant exhausts our internal process and remains dissatisfied, they are referred to the independent assessor.

75% of respondents whose complaints we accepted were satisfied that our information was clear and easy to understand (complaint accepted).

Fairness 66% of respondents who experienced early resolution and/or mutually acceptable settlement agreed that our mediation was handled fairly.

During the last six months of 2012/13 we received 213 contacts about our service or about the outcome of a complaint. Of the 213 contacts, 96 (45%) were service complaints. Of those service complaints, we upheld or partially upheld 56 (58%). Nine complaints were referred to the independent assessor. Only 0.09% of our customers raised a service complaint about us. The board is delighted with this outcome, which is a strong indicator of the focus we put on providing excellent customer service.

53% of respondents whose complaints were fully investigated agreed that the investigation officer’s report was fair and reasonable.

59% of respondents whose complaints we accepted were satisfied with the time it took to reach resolution.

Customers provide us with service feedback in a variety of ways, including our online form, by phone, email or letter, or via their member of parliament (MP). The most common reason for contacting us was a perception that we had treated the customer rudely or unfairly. The most common remedy was an apology (45%). In 10% of cases, a goodwill payment was also made. As part of routine procedures, the quality assurance team, which now handles these contacts, feeds any learning points back to the director of dispute resolution, makes recommendations and suggests remedial action or additional training for particular individuals.

“Only 0.09% of our customers raised a service complaint about us. The board is delighted with this outcome, which is a strong indicator of the focus we put on providing excellent customer service”

At the same time the feedback received from these complaints helps to further improve processes, and ensures we continue to provide what our customers want.

“80% of respondents whose complaints we accepted said ease of using Ombudsman Services was as expected or better”

Annual report and accounts 2012/13 65


Report of the Independent Assessor, Margaret Doyle Executive summary This is my second annual report on my work as Independent Assessor of service complaints about Ombudsman Services. My report covers the 12 month period from 1 April 2012 to 31 March 2013. Case statistics and outcomes During this year 10 service complaints were referred to me. I investigated nine of those; one is in progress. I also decided a case that had been referred to me in the previous year. The number of referrals has decreased considerably from previous years, from 28 in 2010/11 and 18 in 2011/12. As a result of the small number, I can report on the statistics but I cannot draw conclusions about overall service quality. This was also true last year, and for my predecessor in previous years. I investigated three complaints about communications, six about energy and one about property (carried over from previous year). All of the complaints were from complainants in the case rather than service providers. I fully upheld one complaint, partially upheld six complaints and did not uphold three. One referred in the year is in progress. I can recommend apologies, specific actions and financial redress where appropriate. In some cases I make recommendations for improvements in procedure and practice. This year I recommended a total of £1,075 in financial redress, ranging from £50 to £550 in individual cases. In two cases I recommended that Ombudsman Services send an apology to the complainant for the service failure I identified.

66 Ombudsman Services

How I work My terms of reference are set by the board and give me the power to investigate any complaint about the level of service provided by Ombudsman Services, as long as the organisation itself has had an opportunity to respond to the complaint. I work independently of Ombudsman Services and its board, and I am not based at its office. I explain to complainants that I do not consider Ombudsman Services decisions – these are final, and the independent assessor is not a mechanism for appealing or overturning these. Issues The way service complaints are handled by Ombudsman Services has been reviewed and changed this year. I welcome the opportunities for reflection and improvement that such a review can give. Among the improvements in the handling of service complaints is a focus on early and local resolution – encouraging service complaints to be resolved as soon as they are raised and to be resolved by telephone where possible. There have been some difficulties as a result of the changes, particularly in complainants not being signposted to me after exhausting the internal process. In addition, the complaints procedure was removed from the website for several months but has now been reinstated. As a result of these difficulties, many of the complaints that I considered this year were about the way service complaints were dealt with.

Aside from those, the most common service issues this year, as with last year, are the delay in responding (or failure to respond) and the failure to keep complainants updated when there is a delay. Delays will happen in a busy organisation and are sometimes unavoidable. The important thing is to keep service users informed.

• Alleged non-compliance with decisions and settlements. In one case, ambiguity in the wording of the Ombudsman Services decision led to a dispute about whether or not the company had complied with it. Complaints about alleged non-compliance are difficult because complainants often expect that Ombudsman Services has the power to enforce its decisions. I recommended that guidance should be prepared for consumers, explaining Ombudsman Services’ role in monitoring and effecting compliance with its decisions.

Other issues that have arisen in the complaints I have considered include: • Correspondence not being sent to third-party representatives. These were one-off administrative errors, but I asked Ombudsman Services to ensure its procedure was being followed.

• Alleged rudeness by staff. In this case, I listened to the actual call recording and identified a lack of professionalism in the way a call was handled. I could understand the complainant’s frustration, but I did not agree that the staff member had been rude. This one example is not, in my experience, characteristic of the way staff at Ombudsman Services behave. On the contrary, I am again, as last year, impressed with the care the enquiries staff take when speaking to customers and the professionalism they demonstrate in their one-to-one interactions.

• Confusion about goodwill awards. In two complaints, the complainants expected the ombudsman to award financial redress for damage to health, and Ombudsman Services had to provide repeated explanations of its policy that it cannot quantify damage to health or personal injury claims. • Making reasonable adjustments for a disabled service user. In this case, communication was not as effective as it could have been about what adjustments could be made. I recommended that Ombudsman Services publicise its approach to making such adjustments in order to help prevent future misunderstandings.

• Dispute about the sum agreed in a settlement. The call finalising the agreement had not been recorded. When the final settlement was sent out in writing, the complainant disputed the sum of the goodwill payment, claiming what had been agreed was far larger. This incident occurred at a time when calls were not recorded and I am assured that they are now. Acknowledgements I want to thank the Ombudsman Service staff who have been patient and helpful in responding to my queries, and the complainants who raised their concerns with me.

Annual report and accounts 2012/13 67


• Independent auditor’s report • Year ended 31 March 2013 • Notes to the financial statements

70 71 73

Financial statements

68 Ombudsman Services

Annual report and accounts 2012/13 69


Independent auditor’s report to the members We have audited the financial statements of The Ombudsman Service Limited for the year ended 31 March 2013 on pages 71 to 78. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on pages 62 to 63, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

70 Ombudsman Services

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the company’s affairs as at 31 March 2013 and of its surplus for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006.

Year ended 31 March 2013 Income and expenditure account

Opinion on other matters prescribed by the Companies Act 2006

Year ended 31 March 2013

In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

2013 2012 Turnover See note 2 £8,088,517

£7,925,408

Administrative expenses

£6,808,868

Operating surplus See note 3

£8,017,565

£70,952

Interest receivable Interest payable and similar charges See note 6

Matters on which we are required to report by exception

£7,586 £4,128 (£3,991)

(£7,504)

Surplus on ordinary £74,547 activities before taxation

£1,113,164

Tax on surplus on ordinary activities See note 7

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

£1,116,540

£1,517 £1,032

Surplus for the financial year

£73,030

£1,112,132

All of the activities of the company are classed as continuing. The company has no recognised gains or losses other than the results for the year as set out above.

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • the financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit.

Balance sheet

2013 2012 Fixed assets

Year ended 31 March 2013

Tangible assets See note 8

£176,522

£180,451

Current assets Debtors See note 9

£1,707,927

£1,661,902

Investments See note 10 £500,000 –

Maria Hallows (Senior Statutory Auditor) For and on behalf of Beever and Struthers Chartered Accountants & Statutory Auditor

Cash at bank and in hand

£1,256,853

£1,764,698

£3,418,755

£3,472,625

Creditors: amounts falling £1,061,851 due within one year See note 11

£1,179,711

Net current assets £2,356,904

£2,292,914

Total assets less current liabilities £2,537,355

£2,469,436

Creditors: amounts falling due after more than one year See note 12

£5,111

Provisions for liabilities Other provisions See note 14 £55,000 £55,000 £2,482,355 £2,409,325 Reserves See note 17

St. George’s House 215 – 219 Chester Road Manchester M15 4JE 21 May 2013

Income and expenditure account See note 18 £2,482,355

£2,409,325

Members’ funds £2,482,355

£2,409,325

Annual report and accounts 2012/13 71


Year ended 31 March 2013

Notes to the financial statements

Cash flow statement

2013 2012

Year ended 31 March 2013

Net cash inflow from £107,697 operating activities See note 19

72 Ombudsman Services

1 Accounting policies

£1,449,226

Returns on investments See note 19 £3,595

(£3,376)

Taxation See note 19 (£826)

(£592)

Capital expenditure and (£602,345) financial investment See note 19

(£153,789)

Cash (outflow)/inflow (£491,879) before financing See note 19

£1,291,469

Financing See note 19 (£15,966)

(£33,052)

(Decrease)/increase (£507,845) in cash See note 19

£1,258,417

Basis of accounting The financial statements have been prepared under the historical cost convention. Turnover Turnover represents subscription and case fee income of the service and any costs recovered in setting up new Ombudsman services.

Dame Janet Finch, Director Company registration number: 4351294

All fixed assets are initially recorded at cost. Depreciation

Pension costs

Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

The company operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the company. The annual contributions payable are charged to the income and expenditure account.

Fixtures and fittings: 20% straight line Computer equipment: 33% and 100% straight line or over life lease Finance lease agreements Where the company enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a finance lease. The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated in accordance with the above depreciation policies. Future instalments under such leases, net of finance charges, are included within creditors.

Operating lease agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against income on a straight line basis over the period of the lease.

Fixed assets

These financial statements were approved by the directors and authorised for issue on 21 May 2013, and are signed on their behalf by:

Rentals payable are apportioned between the finance element, which is charged to the income and expenditure account on a straight line basis, and the capital element which reduces the outstanding obligation for future instalments.

Financial instruments Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Set up costs All costs are fully written off in the year of expenditure. Any fixed assets capitalised are included within fixed assets at cost and are depreciated 100% in the year of acquisition.

Annual report and accounts 2012/13 73


2 Turnover

The turnover and surplus before tax are attributable to the one principal activity of the company.

6 Interest payable and similar charges

2013 2012 Finance charges

£3,991 £7,504

7 Taxation on ordinary activities

Analysis of charge in the year

2013 2012

An analysis of turnover is given below: 2013 2012 United Kingdom 3 Operating surplus

£8,088,517

Current tax:

£7,925,408

Operating surplus is stated after charging:

UK Corporation tax based on the results for the year

£1,517 £826

2013 2012

Under provision in prior year

– £206

Depreciation of owned fixed assets

£89,268 £68,533

Total current tax

Depreciation of assets held under finance lease agreements

£9,148 £21,271

Auditor’s remuneration as auditor

8 Tangible fixed assets

Additions

At 1 April 2012

£202,482 £611,374 £813,856 £12,465 £89,880 £102,345 £214,947 £701,254 £916,201

£149,490 £487,844 £637,334

Charge for the year

£19,420 £78,996 £98,416

At 31 March 2013

£168,910 £566,840 £735,750

Net book value

177 166

The aggregate payroll costs of the above were:

At 31 March 2013

£46,037 £134,414 £180,451

2013 2012

At 31 March 2012

£52,992 £123,530 £176,522

Wages and salaries

£5,309,683 £4,707,548

Social security costs

£447,943 £434,476

Finance lease agreements Included within the net book value of £180,451 is £0 (2012 was £9,148) relating to assets held under finance lease agreements. The depreciation charged to the financial statements in the year in respect of such assets amounted to £9,148 (2012 was £21,271).

Other pension costs £211,147 £190,363 £5,968,773

74 Ombudsman Services

Total

Depreciation

2013 2012

5 Directors’ remuneration

At 31 March 2013

The average number of staff employed by the company during the financial year amounted to: Number of staff

£1,517 £1,032

Fixtures Computer and fittings equipment

At 1 April 2012

£6,800 £6,300

During the year, we expended £465,817 on the development of a new case management system including the run down costs of our existing system and associated infrastructure. The new system will be rolled out during the forthcoming financial year. 4 Particulars of employees

Cost

£5,332,387

The directors’ aggregate remuneration in respect of qualifying services were:

9 Debtors

2013 2012 Remuneration receivable

£346,372 £331,013

Value of company pension contributions to money purchase schemes

£27,397 £24,736

£373,769

£355,749

10 Investments

11 Creditors: amounts falling due within one year

Total remuneration £128,296 £128,619 (excluding pension contributions)

£144,605

2

£366,059 £280,950 £1,707,927

2013 2012

2013 2012 Trade creditors £363,119 £376,082 Finance lease agreements

£3,752 £14,607

Other creditors

£49,509 £115,634

Accruals and deferred income

£372,273 £276,742

£1,061,851

2013 2012

Prepayments and accrued income

Taxation and social security £273,198 £396,646

£16,037 £15,986

he number of directors who accrued benefits under company pension schemes T was as follows: Money purchase schemes

£1,295,843 £1,426,977

Available-for-sale investments £500,000 –

2013 2012

£144,333

Trade debtors

£1,661,902

Remuneration of highest paid director:

Value of company pension contributions to money purchase schemes

2013 2012

£1,179,711

Finance lease creditors are secured on assets to which the finance relates.

2

Annual report and accounts 2012/13 75


12 Creditors: amounts falling due after more than one year

2013 2012 Finance lease agreements

18 Income and expenditure account

– £5,111

Finance lease creditors are secured on assets to which the finance relates. 13 Commitments under finance lease agreements

Future commitments under finance lease agreements are as follows: 2013 2012 Amounts payable within 1 year Amounts payable between 1 and 2 years

19 Notes to the cash flow statement

£3,752 £14,607

Non-current obligations

– £5,111

£3,752 14 Other provisions

15 Commitments under operating leases

76 Ombudsman Services

£2,409,325

econciliation of operating profit to net cash inflow from R operating activities £70,952 £1,116,540 £46,025 (£59,880)

(£107,696) £247,762 – £55,000

Net cash inflow from operating activities £107,697

£1,449,226

Returns on investments and servicing of finance 2013 2012

£55,000

Interest received

£7,586 £4,128

Interest element of finance leases Net cash inflow/(outflow) from returns on investments and servicing of finance

(£3,991) (£7,504) £3,595

(£3,376)

Taxation £199,750

£168,608

2013 2012 Taxation

In the directors’ opinion there is no ultimate controlling party.

(£826)

(£592)

Capital expenditure and financial investment

No transactions with related parties were undertaken such as are required to be disclosed under FRS 8. 17 Company limited by guarantee

£2,482,355

Increase in provisions

£19,718

Land and buildings 2013 2012

16 Related party transactions

Balance carried forward

(Decrease)/increase in creditors

At 31 March 2013 the company had aggregate annual commitments under non-cancellable operating leases as set out below.

Operating leases which expire: Within 2 to 5 years

£73,030 £1,112,132

Decrease/(increase) in debtors

2013 Provision for dilapidations: Balance brought forward

Surplus for the financial year

Depreciation £98,416 £89,804

Finance lease agreements are analysed as follows: £3,752 £14,607

£2,409,325 £1,297,193

Operating surplus

£19,718

Current obligations

Balance brought forward

2013 2012

– £5,111

£3,752

2013 2012

2013 2012 Payments to acquire (£102,345) (£153,789) tangible fixed assets

The liability of members is limited.

Acquisition of current asset investments

Each director has agreed to contribute £1 to the assets of the company in event of it being wound up.

(£500,000) –

Net cash outflow from capital expenditure (£602,345)

(£153,789)

Financing 2013 2012 Capital element of finance leases (£15,966) (£33,052) Net cash outflow from financing

(£15,966)

(£33,052)

Annual report and accounts 2012/13 77


19 Notes to the cash flow statement continued

78 Ombudsman Services

Reconciliation of net cash flow to movement in net funds 2013 2012 (Decrease)/increase in cash in the period

(£507,845) £1,258,417

Cash outflow in respect of finance leases

£15,966 £33,052

(£491,879) £1,291,469 Change in net funds (£491,879) £1,291,469 Net funds at 1 April 2012

£1,744,980 £453,511

Net funds at 31 March 2013 £1,253,101

£1,744,980

Analysis of changes in net funds

At 1 April 2012

Net cash: Cash in hand and at bank Debt: Finance lease agreements Net funds

Cash flows

At 31 March 2013

£1,764,698 (£507,845) (£19,718) £15,966 £1,744,980 (£491,879)

£1,256,853 (£3,752) £1,253,101

Annual report and accounts 2012/13 79


Registered office: The Ombudsman Service Limited The Brew House, Wilderspool Park, Greenall’s Avenue, Warrington WA4 6HL Registered in England and Wales Registered number: 4351294 www.ombudsman-services.org

80 Ombudsman Services

Designed by sunnythinking.com Š The Ombudsman Service Limited 2013 Produced by the communications team at Ombudsman Services Ombudsman Services would like to thank Catherine Hand for her outstanding support in producing this report


Ombudsman Services Annual Report 2012/13