Anecdotal evidence suggests that consumers in general are far more likely to voice their grievances than they were – say – twenty years ago. However, we need to look for more concrete factors when we forecast the likely levels of complaints reaching us.

The external issues that may impact on the level of complaints for the remainder of this year (2002/03) and the year ahead include:

a) mortgage endowments
It is certain that there will be a significant increase in mortgage endowment complaints to the ombudsman service, although exactly when it will reach us and how large it will be is less easy to predict.

Insurance companies have begun sending out ‘re-projection letters’ to their mortgage endowment policyholders, and they will need to complete this before the summer of 2003. This is not likely to impact on our service until some months after policyholders receive their letters.

It seems very likely that these letters will reveal greater shortfalls than before, leading to more complaints. In addition, fears about the potential impact of a time bar may drive larger numbers of customers to complain to us – at an earlier stage – than might otherwise be the case.

b) falling stock markets
Major falls in the market tend to uncover instances of mis-selling that a more benign environment would conceal. We expect investment complaints generally to rise quite substantially.

c) market-linked bonds
The small number of complaints that we are beginning to see in this area could increase as more of these bonds reach maturity.

d) split capital investment trusts
We have received over 1,700 complaints relating to split capital investment trusts and there is potential for more.

e) insurance and mortgage intermediaries
During 2003 we will extend our jurisdiction to these groups of firms on a voluntary basis, in advance of the likely extension to our compulsory jurisdiction in 2004. However, we do not expect this to have a significant impact on our overall figures during 2002/03.

f) improved complaint-handling by firms
Full compliance with the FSA’s complaint-handling regime remains patchy, and the sheer volume of complaints can put severe pressure on firms’ complaints-handling capabilities. However, the new complaint-handling rules should continue to improve firms’ performance in dealing with complaints, reducing the number of cases that might otherwise escalate and be referred to us.

g) ‘wider implications’ cases
We have put arrangements in place with the FSA for identifying cases that have more wide-ranging regulatory implications and might be susceptible to a regulatory solution.

h) complaints about dual variable mortgage rates
We are assuming that we are unlikely to see a recurrence of the surge of complaints we received in 2002, following the introduction by some lenders of dual variable mortgage rates.

Matching these factors against what we see as underlying trends, and taking into account both historical patterns and an overall ‘sensitivity check’, our 'base' case assumption is that in 2003/04 we will receive 55,000 new complaints, a similar number to that forecast for this year. For our ‘sensitivity check’ we have modelled the scenarios of a 10% decrease or a 10% increase on our ‘base’ case assumption.

Each week our initial contact point, the customer contact division, receives and deals with an average of 5,000 calls and 1,400 written communications from new customers. Approximately 1,100 of these initial contacts per week result in our needing to investigate the customer’s complaint. The division accounts for 15% of budgeted staff numbers and 10% of staffing costs.

We estimate that our emphasis on early complaint prevention (either by providing initial information to the customer, over the phone, or by contacting the firm) means that some 1,000 contacts every week are resolved without being formally referred to us as a complaint against a firm.

The general information we provide may also help a proportion of callers to avoid altogether the need to take up a complaint with a firm. We find that some of the customers who contact us direct about a ‘complaint’ may, for example, simply need reassurance about basic points of general procedure, or an explanation that matters such as a fall in the value of the stock market are not, in themselves, cause for complaint.

Up to the end of December 2002 we had received 190,000 telephone calls and 56,000 written complaints. We expect to have received 260,000 telephone calls and 70,000 new written enquiries by the end of March 2003.

The number of new complaints is increasing, but call volumes and written enquiries have remained stable. This is probably because growing numbers of consumers are visiting our website (www.financial-ombudsman.org.uk). The website now receives up to two thousand visits a day.

From the initial third of a million calls and enquiries we receive, we expect that only 55,000 will become new complaints for us to deal with (as ‘chargeable cases’). Our business process tries to ensure that as many enquiries as possible are resolved before they become new complaints.

We continue to invest in the training of our consumer consultants, with the aim of ensuring that they are all able to deal with enquiries about complaints involving the full range of financial services.

We use a software package that helps us maximise efficiency by allocating and switching staff resources between answering calls and dealing with post.

An analysis of new complaints by major product type is as follows: