1. © May not be reproduced without permission of Financial Ombudsman Service Ltd 1 Cross-border disputes Adrian Dally Head of Policy

2. © May not be reproduced without permission of Financial Ombudsman Service Ltd 2 a statutory footing... we are the statutory ADR scheme set up by Parliament Financial Conduct Authority (the regulator) Financial Ombudsman Service (adjudicates on unresolved disputes) Financial Services Compensation Scheme (fund of last resort) Financial Services & Markets Act 2000

3. © May not be reproduced without permission of Financial Ombudsman Service Ltd 3 our role… we are tasked with resolving individual disputes “ quickly and with minimum formality ”  our job is to settle individual complaints:  fairly  quickly  reasonably  informally  we cover all retail financial businesses based in the UK…  …and some based elsewhere in the EEA who have joined voluntarily  it does not matter where the complainant lives – anywhere in the world.

4. © May not be reproduced without permission of Financial Ombudsman Service Ltd 4 formal conclusions to ombudsman mediated settlements the process… customer contact team unable to resolve adjudicator assessment 2 adjudicator investigation

5. © May not be reproduced without permission of Financial Ombudsman Service Ltd 5 the number of new cases... year ended 31 March 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 200000 220000 240000 260000 280000 300000 2001200220032004200520062007200820092010201120122013

6. © May not be reproduced without permission of Financial Ombudsman Service Ltd 6 accessibility matters… The problem – in the past, we had fewer complaints from:  younger consumers  consumers from ‘lower’ socio-economic groups  consumers with disabilities  consumers whose native language was not English… some groups of consumers find it harder to complain than others so we try to make it easier to contact us

7. © May not be reproduced without permission of Financial Ombudsman Service Ltd 7 accessibility matters even more… …and we realised from stakeholder research that:  consumers from ‘lower’ socio-economic groups were more likely to experience detriment from financial businesses  the average UK / EU reading age was 11  even in 50 years time, we will still have to deal with many consumers ‘off-line’ …because this reflected deeper issues in society as a whole…

8. © May not be reproduced without permission of Financial Ombudsman Service Ltd 8 what we did…  specially-trained team of front-line advisers to work with vulnerable consumers  work with front-line community and advice workers to reach ‘lower’ socio-economic groups  three-way telephone conversations  on-line video and audio content  text-relay and sign-language  information in alternative formats – e.g. large print, CD/DVD, EasyRead we made it easier to contact us by removing as many barriers as we could

9. © May not be reproduced without permission of Financial Ombudsman Service Ltd 9 language matters too… We handled this by:  instant over-the-phone interpretation  translation of correspondence  website information in 25 languages Total of 2282 cases handled in languages other than English or Welsh – 25% in non-European languages in 2012 we had 1910 complaints from outside the UK from 104 different countries in 46 different languages

10. © May not be reproduced without permission of Financial Ombudsman Service Ltd 10 the results so far… Some positive progress, for example:  cases from unskilled consumers 5%  12%  cases from skilled / semi-skilled consumers 36%  54%  cases from professional / managerial consumers 59%  34%  21% of complainants have a disability (18% in population)  cases from non-white consumers 8%  12% …with no difference in outcomes between groups more cases from ‘lower’ socio-economic groups and from those with a disability or from non-white backgrounds

11. © May not be reproduced without permission of Financial Ombudsman Service Ltd 11 cross-border disputes matter… The internal market in financial services is growing  4% of EU citizens holding shares, bonds or investment funds bought them in another Member State,  3% of EU citizens having a bank account opened it in another EU country,  2 % of those with a mortgage, credit card or personal loan bought their product in another EU country and  1% of those having an insurance product bought it in another Member State.

12. © May not be reproduced without permission of Financial Ombudsman Service Ltd 12 so we have FinNet… …to help consumers find the right ADR body when they complain about a trader in another member state  the consumer contacts the nearest (home) ADR body.  the nearest ADR body provides the consumer with the information about the ‘competent’ ADR body in the country of the financial services provider then  the home ADR body sends the complaint to the ‘competent’ ADR body (or helps the consumer to do so)

13. © May not be reproduced without permission of Financial Ombudsman Service Ltd 13 FinNet coverage… …is getting better, but there are gaps CountryBankingPaymentsInsuranceInvestments AustriaFIN-NET BelgiumFIN-NET Bulgaria Cyprus Czech RepublicFIN-NET GermanyFIN-NET DenmarkFIN-NET EstoniaFIN-NET GreeceFIN-NET SpainFIN-NET FinlandFIN-NET France FIN-NET HungaryFIN-NET IrelandFIN-NET ItalyFIN-NET

14. © May not be reproduced without permission of Financial Ombudsman Service Ltd 14 FinNet coverage (continued…) CountryBankingPaymentsInsuranceInvestments LithuaniaFIN-NET LuxembourgFIN-NET Latvia MaltaFIN-NET NetherlandsFIN-NET PolandFIN-NET PortugalFIN-NET Romania SwedenFIN-NET Slovenia Slovakia United KingdomFIN-NET NorwayFIN-NET Iceland FIN-NET Liechtenstein FIN-NET

15. © May not be reproduced without permission of Financial Ombudsman Service Ltd 15 FinNet’s caseload… …is growing Year Total number of cross-border cases handled by FIN-NET members Cross-border cases by sectors BankingInsuranceInvestmentsOther 20071 0414922672802 20081 34667332633512 20091 5428842444104 20101 7941 12334830221 20111°85499251831529

16. © May not be reproduced without permission of Financial Ombudsman Service Ltd 16 the challenges ahead… …there are a number of challenges if ADR is to achieve its full impact  achieve fuller coverage  better accessibility for all consumers – not just on-line  better visibility and branding  better links with regulators  better added value through transparency

17. © May not be reproduced without permission of Financial Ombudsman Service Ltd 17 Any questions ?