On the road(s) to reform

We have seen this past week the publication of two significant markers in the move towards reform of the ombudsman landscape. Both highlight the difficulties faced by a ‘system’ of redress that has developed in an ad hoc way. Both take account of the increased consumerisation of redress, in public- and private-sector disputes. Both attempt, in their own way, to bring about greater harmonisation of the system and to improve access, consistency and accountability. They take very different approaches to such attempts, however: one, to set a relatively low baseline of standards which which redress providers must comply, and thus encourage a multitude of competing providers; the other, to merge existing redress providers into a single scheme, with enhanced powers and remit.

On 17 March, the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations were laid before Parliament. These regulations are the first step towards implementation of the EU ADR Directive, which requires member states to ensure that independent ADR is available for disputes over goods and services. They set out the requirements for ADR providers and the bodies (competent authorities) that will approve them. The Department for Business explains that that the regulations will ‘overlay an existing landscape of disparate provision of alternative dispute resolution’.

‘Disparate’ is perhaps a kind way to describe the landscape. In spite of calls for greater harmonisation, the motley range of ADR provision will remain, in some cases providers competing with each other for customers (businesses) and sharing only compliance with the minimum requirements which with providers must comply.

Although they are minimum requirements, there is something positive in the fact that information requirements will apply to all approved providers. Schedule 3 sets out the requirements that competent authorities must be satisfied that an ADR provider meets before they can be approved. The requirements for transparency (16 of them) are listed under section 5 and require that an ADR provider must state on its website a range of information about how it works, including its procedural rules and the principles the ADR provider applies, and the main considerations it takes into account when seeking to resolve a dispute. That’s helpful, although the level of detail of such information is left open.

Then today we have the long-awaited Cabinet Office consultation on the reform of public services ombudsmen in England. This sets out a number of high-level questions about the overall premise, leaving the detail to a later stage. The questions relate to the underlying principles of the proposed reforms; which services to include; what sector-specific expertise to retain, and what management structure; mechanisms and routes of access for complainants; and investigative powers. The deadline for responses to the consultation is 16 June 2015.

The consultation takes forward the proposals of the Gordon Review, which in its report completed last year but only published today, recommended creating a new Public Service Ombudsman (PSO), bringing together the existing jurisdictions of the Parliamentary and Health Service Ombudsman (PHSO), Local Government Ombudsman (LGO) and Housing Ombudsman (HO). Gordon proposed bringing into the remit of a single Public services ombudsman other public services that aren’t currently subject to an ombudsman’s oversight. Because of the complexity of the way public services are now contracted, paid for and provided, Gordon also recommended ‘following the public pound’ and including within the ombudsman’s jurisdiction arm’s length bodies and private-sector providers who either receive public funds or are contracted by government to deliver public services.

From the perspective of the research we carried out on informal resolution by ombudsmen, it is interesting to note that Gordon highlights as one of the improvements to come about with the integration of the public services ombudsmen is greater harmonisation of published information about complaints and outcomes. The Review report states, in para 140:

In response to the Law Commission’s report, the public service ombudsmen in England accepted the need for greater harmonisation of practice around the way that details about complaints and ombudsmen conclusions are published and shared. The emphasis in the Law Commission’s report was rightly placed on how transparency around ombudsman decisions can be increased – and this was subsequently picked up by PASC in the context of how it might be possible to increase the public visibility of the ombudsman brand. Transparency in this area is also a key means by which the PSO can drive its own internal standards, building and demonstrating the quality of investigations and building a sense of autonomy and responsibility amongst staff within the organisation.”

Transparency and accountability are principles that all ombudsmen subscribe to. Indeed, the vast majority of schemes that we surveyed in our research on informal resolution publish annual reports containing a variety of aspects of their work. Invariably, these include figures about the volume of complaints received and how they are addressed and concluded. However, there are nearly as many ways of presenting those (and other) facts as there are schemes, with the result that meaningful comparisons are almost impossible.

We also found in our survey that transparency was a likely casualty of increased informality. Although formal decisions (or determinations or rulings) are often made public, complaints resolved informally are not. The majority of schemes we surveyed publish some information on informally resolved complaints – most commonly in the form of anonymised selected case summaries. Some, however, publish only statistics, and some publish nothing at all, including one scheme using informal resolution in 90% of its complaints.

If only decisions are published, and these become the minority method of closing complaints, there is less opportunity for ombudsmen to give feedback and to set standards for good complaints handling for the bodies in their jurisdiction. It also makes it difficult for complainants, and those complained about, to assess a proposed resolution against decided outcomes.

We will have to wait to see whether these two roads to reform are in fact heading in opposite directions.


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.