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plan & budget 2005/06 for the year ending 31 March 2006 - complaint trends

new complaints

3.1 Our working assumption for 2005/06 is that the overall number of complaints will be 6% higher than in 2004/05. This is expected to result from: a continued increase in mortgage endowment cases, the extension of our jurisdiction to cover mortgage and general insurance brokers, and contingency for any potential new issue that might arise and generate complaints during the year.

3.2 Predicting the volume of new complaints is an inexact science. A wide range of factors, including the state of the economy, media coverage, and the attitude of consumers and firms, can contribute to the overall level of complaints. As in the past, we would be particularly interested in any feedback from firms or consumer bodies on the assumptions we have made about likely complaint numbers.

3.3 Issues that may have an impact on the numbers of new complaints include the following.

mortgage endowments
The number of complaints next year will be affected by the recent FSA requirement for firms to send out “red” re-projection letters that clearly spell out the date after which any complaint that the individual may wish to make will be “time-barred”. The extent to which this may prompt higher numbers of consumers to complain is unknown.

complaints about matters other than mortgage endowments
We expect the number of these cases to continue downwards and, in particular, we expect to receive fewer complaints about “splits” and “precipice bonds”. Any increase in complaint numbers is expected to come either from the expansion of our compulsory jurisdiction to cover complaints about insurance and mortgage intermediaries, or from some new issue that might arise and generate complaints during 2005/06.

insurance and mortgage intermediaries
We have only very recently begun to cover complaints about these firms and, following discussions with the relevant trade bodies, we have assumed that these firms will generate a total of 5,000 new complaints for 2005/06. However, this figure is based on fairly broad assumptions and we intend to wait for a year to see the actual trend.

contingency for new complaints
As has become our custom, we have allowed for 5,000 new complaints that could be generated by some new issue arising in 2005/06. We regularly discuss any potential new areas for complaints with industry and consumer bodies and with the FSA.

customer contact division

3.4 In 2004/05, phone and written contacts to the customer contact division, our initial point of contact for consumers, have increased by nearly 20% over the previous year. However, in line with our assumptions on new complaints, we do not expect these numbers to rise in 2005/06.

actual 2003/04
forecast 2004/05
budget 2005/06
calls to our enquiry line (0845 080 1800)
291,893
336,000
340,000
new written enquiries
149,569
188,000
190,000
total
441,462
524,000
530,000

3.5 We are currently receiving approximately 6,000 phone calls and letters a week to our front-line customer contact division - as part of the overall workload of 5,000 emails and 2,500 items of post that the ombudsman service as a whole deals with each day. As expected, the majority of these enquiries relate to mortgage endowments.

3.6 Despite the increase in volumes, we were able to achieve our targets for timeliness in dealing with these front-line enquiries, as a result of resource-planning software and continued staff training and development.

3.7 As we noted in para 2.5, our customer contact division plays an important role in the early resolution of complaints. When we are able to resolve complaints at an early stage, avoiding the need to pass them on for further, more detailed work by our case-handling teams, then the firms involved are not charged a case fee. At present, we are resolving over 300 potential complaints a week in our customer contact division, 80% of which relate to mortgage endowments.

analysis of new complaints

3.8 As mentioned previously, in the year 2005/06 we are assuming a 6% increase on the number of new complaints we received in 2004/05. However, this is highly dependent on the volume of mortgage endowment complaints. Looking forward to 2006/07, we expect to see a fall in the number of new mortgage endowment complaints as a result of an increasing number of consumers having their complaints "time-barred". However, this may be offset to some extent by the extension of our jurisdiction to cover complaints about consumer credit firms.

type of complaint
actual 2003/04
forecast 2004/05
budget 2005/06
plan 2006/07
endowment policies linked to mortgages
51,917
67,000
70,000
42,000
single premium investment bonds
7,222
5,500
3,000
1,500
pension products
5,303
3,900
4,000
4,000
mortgage loans
3,220
3,000
3,000
3,000
split capital investment trusts
1,673
1,000
0
0
non-mortgage endowments/whole-of-life policies
5,442
4,000
4,000
4,000
motor insurance
2,727
2,500
2,500
2,500
current accounts
2,106
2,500
2,500
2,500
buildings/contents insurance
2,703
2,500
2,500
2,500
travel insurance
1,453
1,500
1,500
1,500
mortgage and general insurance intermediaries
0
0
5,000
5,000
consumer credit
0
0
0
2,500
other products
14,135
14,600
12,000
13,500
contingency for other (as yet unidentified) area of complaint
0
0
5,000
5,000
total
97,901
108,000
115,000
89,500

workload plans

3.9

opening work-in-progress actual 2003/04
forecast 2004/05
budget 2005/06
plan 2006/07
mortgage endowment complaints
6,078
26,056
44,056
45,056
other complaints
19,426
20,645
17,645
15,645
total
25,504
46,701
61,701
60,701
new complaints
mortgage endowment complaints
51,917
67,000
70,000
42,000
other complaints
45,984
41,000
45,000
47,500
total
97,901
108,000
115,000
89,500
case closures
mortgage endowment complaints
31,939
49,000
69,000
65,000
other complaints
44,765
44,000
47,000
49,000
total
76,704
93,000
116,000
114,000
closing work-in-progress
mortgage endowment complaints
26,056
44,056
45,056
22,056
other complaints
20,645
17,645
15,645
14,145
total
46,701
61,701
60,701
36,201
work in hand (weeks)
mortgage endowment complaints
24.5
35.7
34.0
17.7
other complaints
23.5
18.2
17.3
15.0
total
26.1
28.3
27.0
16.5
productivity
mortgage endowment complaints
7.6
6.2
5.3
5.0
other complaints
3.9
3.3
3.4
3.8
total
4.9
4.4
4.3
4.4
closed within 3 months
mortgage endowment complaints
17%
10%
10%
other complaints
45%
45%
45%
total
48%
30%
25%
25%
closed within 6 months
mortgage endowment complaints
44%
20%
30%
other complaints
70%
80%
80%
total
80%
55%
45%
50%
closed within 9 months
mortgage endowment complaints
75%
60%
70%
other complaints
85%
90%
90%
total
95%
80%
75%
80%
closed within 12 months
mortgage endowment complaints
92%
80%
90%
other complaints
90%
95%
95%
total
96%
90%
85%
90%