corporate plan and 2009/10 budget
January 2009
complaint trends 2008/09 and 2009/10
2008/09 enquiries
Enquiries to our customer contact division are expected to be 66% higher than budget. This reflects, amongst other things, the impact of large volumes of complaints about PPI and credit-card default charges.
| enquiries | actual 12 months 2007/08 |
actual 9 months 2008/09 |
forecast 12 months 2008/09 |
budget 12 months 2008/09 |
|---|---|---|---|---|
| phone calls to our enquiry line | 425,942 | 283,465 | 400,000 | 260,000 |
| written enquiries | 368,706 | 286,651 | 380,000 | 210,000 |
| total | 794,648 | 570,116 | 780,000 | 470,000 |
2008/09 new cases
We now expect to receive 120,000 new cases in 2008/09. This is 33% higher than the figure in the budget – which assumed a significant reduction in the number of new cases, mainly due to a fall in new mortgage-endowment cases and to new cases about unauthorised-overdraft charges being put on hold during the continuing High Court case.
However, as explained in earlier chapters, the anticipated reduction in these cases has been offset by significant increases in new cases relating to other products – including PPI and credit-card default charges.
| new cases | actual 2007/08 |
forecast 2008/09 |
budget 2008/09 |
|---|---|---|---|
| banking | |||
| credit cards | 14,123 | 17,000 | 8,000 |
| current accounts | 39,263 | 13,000 | 8,000 |
| mortgages | 6,824 | 9,000 | 8,000 |
| other | 8,258 | 10,000 | 9,000 |
| insurance | |||
| payment protection (PPI) | 10,652 | 25,000 | 11,000 |
| car/motor | 6,009 | 7,000 | 6,500 |
| other | 10,622 | 13,000 | 12,500 |
| investment | |||
| endowments linked to mortgages | 13,778 | 6,000 | 10,000 |
| pensions | 5,297 | 6,000 | 4,000 |
| other | 7,414 | 11,000 | 10,000 |
| consumer credit | 849 | 3,000 | 3,000 |
| total | 123,089 | 120,000 | 90,000 |
2008/09 cases resolved
In line with the general expectation that we would receive fewer new cases in 2008/09, we began the year with a reduced capacity linked to a target of resolving 110,000 cases. But, in line with the higher-than-expected volume of new cases and the consequent increase in our workload, we have recruited more than 230 additional adjudicators (both permanent and some outsourced) – with another 70 likely to join us by the end of March 2009.
This increase has taken place in a managed way during the course of the year, but inevitably there is a time lag before newly-recruited adjudicators become fully trained and effective. In 2008/09 we now expect to resolve 115,000 cases. But in 2009/10, when the new additional adjudicators will become fully productive, we expect to resolve the record number of 165,000 cases.
2008/09 productivity and timeliness
The need to divert existing staff to training and mentoring our new adjudicators, and the delay in new adjudicators becoming fully effective, has had some impact on productivity. Nevertheless, we expect productivity to be very close to budget, with 4.6 cases resolved by each adjudicator each week.
The unexpected influx of new cases has increased the level of our work-in-progress significantly, which has inevitably had a marked effect on timeliness. Following the recruitment of additional adjudicators, we expect an improvement in timeliness during 2009/10.
| workload plans | actual 12 months 2007/08 |
actual 9 months 2008/09 |
forecast 12 months 2008/09 |
budget 12 months 2008/09 |
|---|---|---|---|---|
| opening work-in-progress | 33,974 | 57,364 | 57,364 | 58,536 |
| new cases | 123,089 | 93,526 | 120,000 | 90,000 |
| cases resolved | 99,699 | 80,799 | 115,000 | 110,000 |
| closing work-in-progress | 57,364 | 70,091 | 62,364 | 38,536 |
| work in hand (weeks) | 29.7 | 28.0 | 21.9 | 17.3 |
| productivity | 4.0 | 4.7 | 4.6 | 4.7 |
| % closed within 6 months | 70 | 61 | 60 | 80 |
| unit cost | £529 | n/a | £544 | £542 |
2009/10 enquiries
Enquiries to our customer contact division during 2009/10 are expected to grow in line with our estimate of new cases.
| enquiries | actual 2007/08 |
forecast 2008/09 |
budget 2009/10 |
|---|---|---|---|
| phone calls to our enquiry line | 425,942 | 400,000 | 500,000 |
| written enquiries | 368,706 | 380,000 | 475,000 |
| total | 794,648 | 780,000 | 975,000 |
2009/10 new cases
The total number of new complaints is expected to increase to 150,000, 25% above the forecast for 2008/09. As in previous years, forecasting the numbers of our incoming complaints is not an exact science. But, from our initial consultation with industry bodies, there seems wide agreement that the numbers will materially exceed this year's forecast.
| new cases | actual 2007/08 |
forecast 2008/09 |
budget 2009/10 |
|---|---|---|---|
| banking | |||
| credit cards | 14,123 | 17,000 | 16,000 |
| current accounts | 39,263 | 13,000 | 18,000 |
| mortgages | 6,824 | 9,000 | 16,000 |
| other | 8,258 | 10,000 | 15,000 |
| insurance | |||
| payment protection (PPI) | 10,652 | 25,000 | 22,000 |
| car/motor | 6,009 | 7,000 | 11,000 |
| other | 10,622 | 13,000 | 17,000 |
| investment | |||
| endowments linked to mortgages | 13,778 | 6,000 | 6,000 |
| pensions | 5,297 | 6,000 | 8,000 |
| other | 7,414 | 11,000 | 16,000 |
| consumer credit | 849 | 3,000 | 5,000 |
| total | 123,089 | 120,000 | 150,000 |
credit cards
We have assumed a modest reduction in case volumes, based on the expectation that default-charges disputes will reduce whilst disputed-interest, disputed-transaction, administration-related and fraud-related cases will increase, in line with pressures in the banking sector.
current accounts
We have assumed significant increases in cases alleging poor account administration or inadequate customer service, particularly relating to institutions under financial pressure or suffering merger disruption. The figure will be materially higher if a significant number of new cases about unauthorised-overdraft charges come to the ombudsman service.
mortgages
These cases are expected to increase in line with tighter lending policies and a higher level of repossessions. Some issues relating to sales and contract terms will emerge as customers reach the end of existing deals and find renewal terms unattractive. And there is the potential for a significant volume of disputes around mortgage late-payment charges and other similar charges.
other banking issues
These are likely to include a variety of loan, overdraft and administration issues, including those relating to small businesses. Many banking issues are likely to arise from the increasing financial pressures on banks and their customers.
payment protection
Our forecast assumes a modest reduction in PPI case volumes. It is possible that the reduction may be greater if financial businesses improve their complaints-handling in relation to large areas of justified complaint. But – with several million PPI policies having been sold in recent years, and given the findings of regulatory investigations – there remains a significant risk that the numbers will exceed the forecast.
motor and other insurance
We have assumed across-the-board increases, as a result of financial pressures on insurers and customers and the impact of mergers. We have set up a joint exercise with the Association of British Insurers (ABI) to investigate what may be causing the current increase in these cases. But we have to make the assumption that the current upward trend will continue.
mortgage-endowments
We expect new cases to continue at around present levels, despite some upward pressure as increasing numbers of consumers receive 're-projection' letters showing likely shortfalls and as more policies reach the end of their term.
investment
Past experience suggests that poor stock market performance can be expected to result in increased complaints. These may arise, for example, where a financial business applies a market-value reduction to a with-profits fund, or where a fall in value exposes a mis-sale that was previously overlooked.
pensions
Stock market impacts, mentioned above, are likely to be mitigated by a decline in cases about opting out of SERPs (the State Earnings Related Pension scheme) which were at a high level during 2008 as a result of specific campaigns by some claims-management companies.
consumer credit
We assume a significant increase as credit-related pressures grow – for example, in relation to debt collection.
2009/10 cases resolved
The present high level of new cases has created a situation where some consumers and businesses have to wait longer than we would like before their cases can be resolved. To address this, and to deal with the expected level of new cases in 2009/10, we will increase the number of our adjudicators to nearly 700.
This should enable us to resolve 165,000 cases in 2009/10 – a significant increase over the current year. In addition to maintaining our productivity levels, this should reduce our work-in-progress to an average of less than 15 weeks by the end of 2009/10.
We have also modelled two other scenarios, with the number of new cases either 25,000 above or below our central assumption.
More new cases: our experience from previous years illustrates the need to plan for the contingency of significantly higher volumes of work. However, our budget already reflects significant increases in new complaints over present levels in all areas except PPI, credit-card default charges and mortgage-endowments. The ability to increase capacity to resolve more than 165,000 cases is uncertain – because of limits on the number of cases suitable for outsourcers, and the challenge of integrating even more new staff. So this scenario assumes that the additional cases would result in work-in-progress at an average of 23 weeks, with a consequential effect on timeliness.
Fewer new cases: the flexibility of our partially-outsourced model would enable us to reduce the number of adjudicators, comparatively easily, by about 40. That would leave us with the capacity to resolve 125,000 cases, reducing our work-in-progress to an average of 13 weeks. Lower volumes may adversely impact on the level of productivity.
2009/10 productivity and timeliness
Our budget assumes that overall productivity will remain around the present level. Where there are large numbers of cases relating to similar issues, there may be opportunities for increased efficiencies by using bulk-handling initiatives. But we need to set against this the effect of working practices in financial businesses, where disruption arising from mergers or service cutbacks may impact on our ability to handle cases efficiently.
As mentioned above, the increase in the number of adjudicators we have available should enable us to achieve a material improvement in our timeliness in resolving cases.
| workload plans | actual 2007/08 |
forecast 2008/09 |
budget 2009/10 |
|---|---|---|---|
| opening work-in-progress | 33,974 | 57,364 | 62,364 |
| new complaints | 123,089 | 120,000 | 150,000 |
| cases resolved | 99,699 | 115,000 | 165,000 |
| closing work-in-progress | 57,364 | 62,364 | 47,364 |
| work in hand (weeks) | 29.7 | 21.9 | 14.9 |
| productivity | 4.0 | 4.6 | 4.7 |
| % closed within 3 months | 42 | 35 | 45 |
| % closed within 6 months | 70 | 60 | 65 |
| % closed within 9 months | 81 | 80 | 85 |
| % closed within 12 months | 86 | 90 | 90 |
note
For clarity, we have excluded from these figures the 15,000 cases we have 'on hold' about unauthorised-overdraft charges. These cases continue to await the outcome of the test case in the High Court.