Financial Ombudsman faces huge backlog of claims.

The Financial Ombudsman Service (FOS) has still to resolve 30,000 claims.

This is the number of claims that have not yet even been allocated to a case officer.  It is a threefold rise in unresolved cases since 2016.

On top of that, there are another 8,000 claims still waiting for adjudication.

A lot of claims arise from the use of payday lenders.  The Financial Ombudsman Service looks at claims from people who have a dispute with their banks or insurance companies or other financial product providers.

Some of the claims will also relate to the mis-selling of personal protection insurance or PPI.  The Financial Conduct Authority (FCA) announced last year that it would end the claims process for PPI in August this year.  Estimates say £billions are owed to customers by the Banks. It is hard to see how anyone still owed a PPI refund will have the time to make a proper claim or indeed have any complaint heard.

The news came to light after a whistleblower came forward.  In March last year Channel 4’s programme ‘Despatches’ claimed the FOS was failing customers.

This sparked a House of Commons inquiry.

The Treasury Select Committee set up to investigate questioned the Chief Executive of the FOS, Caroline Wayman.

Wayman did not dispute the whistleblower’s claims, but defended the FOS’s record.

The organisation typically deals with about 100,000 “core” disputes each year, but it had recorded 50,000 more complaints about payday lenders from consumers in the past year, she told the Committee.

She admitted this had caused delays.  The recruitment of more staff would ease the caseload.  Particularly in the low-cost credit market. Had Wonga not collapsed, the number would have been higher, she said.

However, the MPs expressed concerns that the delays getting cases heard are only set to get worse.

In 10 weeks’ time,  210,000 more small and medium-sized businesses will soon be entitled to use the service. a service that is already “swamped”, they said,

Wayman said the extra staff would address these concerns. An extra 20 ombudsmen were being recruited to deal with SME complaints.

Payment protection complaints had fallen below those expected in the last 12 months, she added.

The Financial Conduct Authority (FCA) set a deadline of 29 August for the final PPI claims to banks and other loan providers.

When Asked why the FOS was shedding permanent staff through a voluntary redundancy programme, while taking on more expensive “contract” staff, she claimed this gave the FOS flexibility. MPs expressed shock that the FOS plans to spend £100m-plus a year on contractors from the next financial year.

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