Déjà vu? Looking back at the development of informal resolution and ADR within an ombudsman context

A fairly uncontroversial definition of an ombudsman is “An official appointed to investigate individuals’ complaints against a company or organisation, especially a public authority”.

But is an ombudsman’s primary activity to investigate? How do ombudsmen and other complaint-handling bodies actually deal with the cases brought to them, and what proportion are subject to investigation as opposed to some other form of case closure?

In our research we are trying to identify to what extent investigation (arguably the original key task of ombudsmen) is being replaced by other approaches, most notably those that fall under the term appropriate dispute resolution, or ADR. As part of this work, we’ve taken a look back in time.

The use of ADR by ombudsmen was set out in 2011 by the Law Commission in its report on the public services ombudsmen:

“5.7 By alternative dispute resolution we mean using mechanisms other than formal investigations to dispose of complaint. This happens already, and the ombudsmen have developed sophisticated mechanisms allowing them to encourage ‘local settlement’, or similar, of complaint.

5.8 In the majority of cases the appropriate mechanism for alternative dispute resolution is that an ombudsman informs the public body of the complaint made to the ombudsman and encourages the public body to resolve the matter. In other situations recourse to mechanisms such as mediation may be appropriate.”

The current climate in which we are conducting this research is an interesting one. Ombudsmen and other complaint-handling bodies are being put under the spotlight by recent Parliamentary Select Committee inquiries and by developments in consumer redress such as the EU ADR Directive. Recent reports including The Future of Ombudsmen and Benchmarking the Legal Ombudsman have flagged up the increased use of informal approaches to complaint handling. We’ve been struck, while carrying out the research, at the way this spotlight is exposing issues that have in fact been lurking for some time.

Looking back over the past 20 years, we can see that informal approaches have been a feature of ombuds practice for some time. In 1997, the then National Consumer Council published a directory of ombudsmen with a summary of each scheme’s complaint-handling processes. Then:

• The Funeral Ombudsman (now defunct) closed 90% of its cases through a process it called ‘informal conciliation’.
• The Ombudsman for Estate Agents closed 14% by what it called ‘mediation’.
• The Insurance Bureau (one of the schemes later amalgamated into the Financial Ombudsman Service) recorded 77% of cases resolved by ‘case-handler mediation’.
• The Local Government Ombudsman closed nearly a quarter of its cases through ‘local settlement’.
• Both the Northern Ireland Ombudsman and the Ombudsman for the Republic of Ireland closed 90% of its cases ‘informally’, with only 3% going to investigation.
• The Housing Ombudsman was perhaps the most innovative; a third of its complaints were either settled or rejected, but of the rest, it closed 20% of cases by informal conciliation, 25% by mediation, 6% by arbitration and 15% by binding decision.
• In 2002, the Financial Ombudsman Service resolved 85% of complaints by mediating and recommending settlements – without needing to use formal ombudsman powers to make binding decisions. This is similar to the figure given to us in our current research – 90%.

But it seems the use of informal resolution hasn’t been so much a steady increase as an ebbing and flowing. For the Parliamentary Ombudsman, for example, the percentage of informally resolved complaints has gone from 0% in 1997 (when the NCC directory was published) to more than 30% in 1999-00. Two years later, this had increased to nearly 40%. Fourteen years on, the pendulum has swung yet again. Giving evidence to the Public Affairs Select Committee enquiry this year, the Parliamentary Ombudsman explained that its focus would be on more investigations; it reported, in response to our research, that it anticipates informally resolving only 3-4%.

In principle, informal resolution fits well with the appropriate dispute resolution agenda. This is because informal resolution starts with the premise of what the particular complainant wants to achieve, not what a generic or hypothetical complainant is entitled to or might reasonably expect from a judicial ruling.

The use of ADR processes in practice raises some concerns, however, especially in relation to how and when they are used in the context of ombuds and complaint handlers. Does an informally resolved complaint simply amount to a ‘recommendation without investigation’? Are informal outcomes published? Who ‘owns’ the complaint and who determines that it is satisfactorily resolved – the ombudsman or the parties to the complaint? Who decides whether a complaint is to be resolved informally rather than investigated, and what could this mean for complaints that might be in the public interest to investigate?

These are the questions we want to explore in the discussions we hope to have after publishing our report.