Déjà vu? Looking back at the development of informal resolution and ADR within an ombudsman context
9 September 2014
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.
Clear as clear can be?
18 August 2014
‘Transparency’ is a bit of a buzz word in the ombudsman world. Specifically, it features in Article 7 of the EU ADR Directive (to be implemented in the UK from summer 2015) and in the “Guide to principles of good complaint handling” of the Ombudsman Association. More generally, it is one of the characteristics cited frequently in the promotion of the ombudsman ‘brand’. But do ombudsmen walk the walk or just talk the talk when it comes to transparency?
In our research on the way ombudsmen use informal resolution, we are coming up against an odd sort of transparency. The organisations we’ve surveyed have been very generous in responding to us – that in itself is a form of transparency. Most, if not all, publish information on their work. The actual meaning of that information, however, is often quite opaque.
We noted in our last progress report that ombudsmen and other complaint handlers don’t use the same terminology to describe the complaints they receive and how they process them. We’re also finding that they don’t report on outcomes in the same way – something that the authors of The Ombudsman Enterprise identified when they stated that official statistics published by ombudsmen “have to be examined with care”. They note that changing methodologies and definitions “can make comparisons from one year to the next and between schemes problematic”. ‘Problematic’ is putting it rather mildly. Trying to make sense of reported statistics requires examining in detail the context behind the figures we’ve been given, something that isn’t within the scope of our current project but which requires further research.
‘Harmonisation’ is another buzz word. A recent essay on “Harmonising the Ombudsman Landscape” argues that redress providers under the EU ADR Directive should be modeled on ombudsmen as a way to promote the brand in the eyes of consumers, in part because of the level of transparency:
“The competent authority, alongside the Ombudsman Association, should work with ADR bodies to align the practice and processes that they use. For best possible effect, this should be done with the core model of an ombudsman scheme in mind: for the transparency of process it affords; for the simplification of the landscape; for the benefit of justice for the consumer; for the uniformity of decision; and for the benefits the gathered data can provide to regulation, government, and the consumer.” [p.4]
There are many assumptions here – that ombudsman processes are transparent, that they deliver justice, that decisions are or could be made uniform. These assumptions need further interrogation, something highlighted at a conference on ADR and ombudsman held in Oxford in April this year. The conference organisers concluded in a policy brief that ombudsmen will need to work toward greater harmonisation of processes, terminology, and standards in order to become an essential part of the justice system.
The EU ADR Directive and transparency
The issue of transparency takes on some urgency in light of the impending implementation of the EU ADR Directive. In Article 7(2), the Directive states that all ADR providers shall make their activity reports publicly available, and these should include, among other statistics:
(a) the number of disputes received
(c) the rate of disputes the ADR entity has refused to deal with and the percentage share of the types of grounds for such refusal …
(d) …the percentage shares of solutions proposed or imposed in favour of the consumer and in favour of the trader, and of disputes resolved by an amicable solution
(e) the percentage share of ADR procedures which were discontinued and, if known, the reasons for their discontinuation
(f) the average time taken to resolve disputes
(g) the rate of compliance, if known, with the outcomes of the ADR procedures…
Let’s take a) above as an example. The number of complaints received is reported in a number of different ways currently. Some schemes report all contacts or enquiries, and then break this down into a further category of accepted or eligible complaints. Not every enquiry is a complaint.
Figure c) above refers to those complaints that are out of jurisdiction, late, premature, or otherwise not within scope. Subtracting the figure in c) from that in a) should give you the figure of accepted or eligible complaints.
But it isn’t that simple, because in this space between ‘received’ and ‘resolved’ we have more than only those complaints the scheme has refused to deal with. We also have ones (according to our survey responses) where advice is given or where a complaint might be in scope but can be remedied with a ‘quick fix’. We have some that may or may not be in scope but might be amenable to resolution with the ombudsman’s intervention. And we have those that are accepted as eligible but not dealt with by one of the three categories of process set out in the directive: a solution, proposed, imposed, or agreed between the parties. Where, for example, a case handler identifies that a suitable remedy has been offered and declines to progress the complaint, is this a proposed solution or a rejection? Confusingly, we have found that this is sometimes categorised as a ‘resolution’.
When we move on the requirements to provide a rate or percentage, we need to know which figure is being used as the starting point. For instance, is the percentage of complaints ‘resolved by amicable solution’ referring to the percentage of all complaints received (a) or is it the percentage of all accepted or eligible complaints (c)? We are finding a range of approaches to this question, making it difficult to make comparisons or draw meaningful conclusions.
Why does it matter?
In a recent essay on evolving standards in ombudsmanry, Richard Kirkham and Philip Wells examine issues of due process and fairness in ombudsmen decision-making, which are linked to openness and transparency:
“The uncertainty surrounding decision-making in the sector is made more marked by the trend over time towards resolving complaints at the pre-report stage, often by way of a letter rather than a formally completed report (Buck et al., 2011 , Ch. 4). The outcomes of such early redress have often not been published. … But the strength of the connections between the benefits to be gained from transparency and the perceived weaknesses in the complaint-handling operation do provide strong grounds for believing that more openness about the decision-making process of complaint-handlers could significantly improve confidence in complaint-handling schemes.” [p.196].
In a 2010 consultation paper on public services ombudsmen, the Law Commission originally proposed that the ombudsmen should harmonise their reporting terminology and all publish reasons for decisions not to investigate specific complaints. This was considered to be overly onerous and was opposed by the public services ombudsmen, and the Law Commission altered its recommendation. It still argued for greater transparency to allow complainants to understand the handling of their complaints, but it stepped back from recommending that the terminology of the reports issued by each ombudsmen should be harmonised.
Does transparency require standardisation? Does harmonisation mean uniformity? And how do harmonisation and transparency fit with flexibility? The call for greater consistency among ombudsmen in the processes they use (for example, in the Harmonisation essay cited above) could be read as a call for a single informal resolution process to be adopted among ombudsmen. This would be an interesting point for us to reflect on as we take this research forward and discuss it with practitioners and policy makers in the ombudsman world.
Defining informal resolution
21 July 2014
We’re very pleased to have reached two milestones in our relatively small-scale mapping study: we presented initial findings at a conference on ADR and ombudsmen at Wolfson College, Oxford, in April, and we’ve just received our final responses to our survey. Only 3 of the 53 ombudsmen and other complaint handlers we contacted have not participated, a response rate of 94% that is hugely helpful to us but also demonstrates the commitment and generosity of those involved in the complaint-handling world in the UK.
The next stage is to analyse our responses and begin drafting our report, which we aim to launch in early October at the Nuffield Foundation in London. We are carrying out a number of follow-up interviews to explore some of the discrepancies and differences that are appearing in practice and to test how we might approach the definitions of informal resolution approaches.
At the Oxford conference we presented some early findings. We noted that terminology has featured as a key obstacle to understanding what approaches our respondents are using and how they relate to those used by others. For example, one person’s ‘mediation’ is another person’s ‘early neutral evaluation’, and ‘informal’ is used to describe all the work of some ombudsmen when compared with court or tribunal procedures. We’re also finding that it is a rare ombudsman who has written criteria for when to use settlement approaches and when to investigate and determine a complaint.
It’s too early to provide any conclusions or recommendations yet, and we’re mindful of the challenges that ombuds are currently facing – with Parliamentary Select Committee inquiries and the EU ADR Directive posing questions about the future role and shape of the ombudsman landscape. But that also means it’s an interesting time to take a close look at the actual practice of ombudsmanry, to lift up the rock and see what lurks beneath.