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As concerns are raised, just how thorough will Richard Lloyd’s review of FOS be?

Earlier today, The Times[1] reported on concerns regarding Richard Lloyd’s past links with the Financial Ombudsman Service, whilst previously working as a Director at Which? for 5 years until 2016, and his current chairmanship of Resolver, a consumer website that works with the service. These reported comments follow an interview for BBC’s Money Box show last month, during which Mr Lloyd advised he had not had any dealings with the Ombudsman for over 2 years and would be entering the review with an “open mind”.[2]


The review of the Service is to be conducted quickly as Mr Lloyd is required to present his findings to the Treasury Select Committee before the Summer Recess, so while he vows to look at the ‘good, bad and ugly’, just how effective can this time–constrained Independent Review be? The Terms of Reference he has been issued with focus heavily on the findings of the Channel 4 Dispatches programme and miss the opportunity to extend the review so it addresses the concerns of all sectors. The Treasury Select Committee told the Ombudsman Service that the review should not be limited solely to the Dispatches allegations. For example it does not reflect the concerns of consumer credit lenders regarding the Ombudsman accepting dubious complaints made several years after the event, usually submitted by Claims Management Companies or no-win-no-fee lawyers and ironically, supported by some consumer websites like Resolver.


Some lenders claim that when they receive such a complaint the expenditure report is often very different from that stated at the time of the loan application. The claim is massaged to give a different financial picture at the time the loan was taken out from the application data given to the lender, in order to suggest that the borrower could not afford the loan at the time. Yet the Ombudsman’s approach is to accept the claimant’s assertions without making detailed checks of the discrepancies, allowing some unjustified pay-outs.


Separately, in 2013, 4% of PPI claims referred to the FOS were made by people who had never had a PPI contract. If the 4% figure were sustained, then from 2011 to 2017 when there were around 1.5 million PPI claims to the FOS, up to 60,000 spurious claims could have been made by consumers who never had a PPI contract at all. When questioned, the Ombudsman said it does not compile records of the numbers of false or misleading claims it receives.


For the independent review to have any true credibility it would be prudent for Richard Lloyd to utilise his open-minded approach so it encompasses the thoughts of both consumers and industry sectors regarding their experiences of FOS caseworkers and the Service generally. If time does not allow for this, then perhaps the recommendation to the Treasury Select Committee should be to extend the deadline and terms of reference in order to allow Mr Lloyd (or someone else) to undertake a full investigation rather than running the risk of being accused of a ‘whitewash’ due to a lack of time.

[1] https://www.thetimes.co.uk/article/conflict-of-interest-fears-over-financial-ombudsman-review-chief-richard-lloyd-gc6568vh9


[2] https://www.bbc.co.uk/programmes/b0b1hvdh/segments

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