Briefing: Fewer FOS complaints begins with better claims decisions

The current approach to complaint handling and reporting within insurance has now been in place for more than a decade.

So, as the industry continues to evolve, it may be worth asking whether the role of the Financial Ombudsman Service (FOS) has evolved too – and whether its place within the customer journey is sometimes taken for granted.

Ten years ago, I remember noticing significant changes within claims departments. Dedicated complaints teams were being established, new complaint identification processes were introduced and frontline handlers were asked to record and monitor customer dissatisfaction in a much more structured way. If a concern could not be resolved quickly, it was escalated for formal review.

For claims handlers, this represented an additional responsibility alongside an already demanding role. However, many complaints specialists at the time had previously worked in claims themselves.

They understood the complexities, misunderstandings and grey areas that can arise during a claim. Importantly, they often acted as a fresh pair of eyes, reviewing decisions objectively and challenging assumptions where appropriate.

Today, complaint handling is a well-established and highly regulated process. Yet keeping policyholders satisfied remains challenging. Insurance is unusual in that customers pay for a promise that only becomes tangible when they need to make a claim. Expectations can understandably be high and disappointment can arise when the claims experience does not match those expectations.

Complaints can stem from a wide range of issues. They may relate to communication delays, service frustrations, disputed coverage, claim declinatures or more significant financial consequences. The impact on customers can therefore vary considerably, from minor inconvenience to serious hardship.

At the same time, the FOS faces increasing pressure from the volume of complaints it receives. The service plays an essential role in providing consumers with access to an independent review process and remains a vital safeguard within the market.

Avoiding complaints

This raises an important question. Are some disputes reaching the FOS that could have been resolved earlier through additional internal review, technical challenge or deeper customer engagement?

Insurers and brokers invest significant resources in expertise, governance and customer outcomes. In some circumstances, a further independent review within an organisation may help identify alternative solutions before a complaint progresses externally.

The introduction of the Insurance Act 2015 sought to improve fairness and transparency in the relationship between insurer and policyholder. Alongside developments in complaint handling, the industry’s broader focus has increasingly been on ensuring that customers are treated fairly and understand the decisions that affect them.

Ultimately, the FOS exists to provide consumers with access to an impartial decision when agreement cannot be reached.

However, the industry’s collective aim should always be to resolve issues as early and effectively as possible. Achieving that requires investment in technical knowledge, training, communication and decision-making at every stage of the customer journey.

We must all take responsibility for doing the best by our customers. Complaints should be properly investigated, fairly resolved and clearly explained. But above all, decisions made on claims must be right. That is the responsibility of our insurance industry and the foundation on which customer trust is built.

When all available avenues have been explored, policyholders should absolutely have the right to have their concerns considered by an independent body. The FOS plays a vital role in providing that reassurance. Yet the greatest success for the industry would be ensuring that customers receive clear, well-reasoned and understandable decisions long before a complaint reaches that stage.

The FOS should remain what it was always intended to be – an independent safeguard when every other avenue has been exhausted. The real challenge for insurers, brokers and claims professionals is to get the decision right and ensure customers understand why.

Ultimately, the right decision, clearly explained, remains the most effective form of complaint resolution.