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annual review 1 April 2004 to 31 March 2005 - chairman's foreword

I am delighted to have succeeded Sue Slipman as chairman of the Financial Ombudsman Service. Sue had a big impact during her two years as chairman and she will be sorely missed. During the year the board also said goodbye to four of its members, three of whom had served on the board since its creation in 1999. Their wisdom and experience was invaluable in helping to create the service as it now is. My regret at their standing down is tempered only by the fact that we have been able to replace them with new board members of a similarly high quality.

The last year has seen another significant increase in the workload of the ombudsman service, caused entirely by the continuing flood of mortgage endowment complaints. Meeting the demands that this has involved has posed considerable operational challenges. Complaints-handling resource is not a tap that can just be turned on and off. We have mounted an intensive - and successful - recruitment and training programme, and our staff have responded magnificently at all levels. But the stresses this imposes on the organisation are considerable. If we are to continue to provide a fair and effective service - resolving disputes within reasonable timescales - complaints-handling by some financial firms must improve, so that a smaller proportion of disputes need to be referred to the ombudsman service, or better still, so that the causes of disputes can be reduced. Following action by the industry regulator, the Financial Services Authority, there are some signs of this beginning to happen.

Part of our strategy has been to prioritise complaints other than those about mortgage endowments - so as not to let the surge in endowment complaints overwhelm all our other work. This approach has been successful. In the last year we resolved more complaints than we received about matters other than mortgage endowments. But it does mean that mortgage endowment cases are taking longer for us to resolve than we would like. I am grateful to consumers for their patience when we explain this to them.

Again this year - as part of this annual review - we have published in full the separate report by the independent assessor. The independent assessor's role is to investigate complaints made against the ombudsman service. I am grateful to Michael Barnes, the independent assessor, for his work in casting an impartial eye over our service.

During the year the ombudsman service was also subjected to the rigorous independent scrutiny of Professor Elaine Kempson of the Personal Finance Research Centre at Bristol University. Professor Kempson carried out a detailed assessment of our work, and I was greatly heartened by her verdict - that we are doing a good job in difficult circumstances. I recognise, however, that what ultimately counts is the personal experience of each individual firm and consumer who uses our service. This focus on providing a service at the individual level is what has always driven the Financial Ombudsman Service, and will continue to do so.

Chris Kelly signature
Sir Christopher Kelly KCB
June 2005

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