MPs back Martin's call for an overhaul of ombudsmen

The All-Party Parliamentary Group (APPG) on Consumer Protection – a cross-party group of politicians which includes MPs and a peer from the House of Lords – has today published a new report calling for the issue of ombudsmen reform to be referred to the Law Commission, which is an independent body that reviews and recommends reforms to laws.

And the MPs have made a number of recommendations for change which could be made in the meantime, including new requirements that all ombudsman schemes have mandatory membership, are able to enforce their decisions and are directly answerable to Parliament via select committees.

MoneySavingExpert provided the APPG with funding for the inquiry costs, and its independent report today is a follow-up to MSE's report Sharper Teeth: The Consumer Need For Ombudsman Reform, which was commissioned by the group of MPs in 2017. MoneySavingExpert backs the calls made by the APPG today.

Read the APPG's report in full here.

What does the report recommend?

The APPG issued a call for evidence on the ombudsmen landscape in April 2018 amidst long-standing concerns about the wide variation in the standards of complaints handling and reports of consumer confusion, flagged by MoneySavingExpert in its Sharper Teeth report in 2017.

The report recommends that in the long term, the Government should refer wholesale reform of the ombudsman sector to the Law Commission, recommending one ombudsman for each sector with compulsory membership.

But in the short and intermediate term, it recommends:

• Ombudsman schemes that do not have mandatory membership and/or cannot enforce their decisions should be stripped of the right to use the word 'ombudsman' in their title.

• Complainants should only have to wait four weeks before passing their case to an ombudsman.

• All ombudsmen should be required to give evidence to Parliament via the appropriate select committee.

• All ombudsman schemes should publish annual reports, including anonymised examples of complaints.

• There should be commitment to research into the viability of a 'single portal' for all consumer complaints.

• Ombudsman schemes should commit greater resources to their websites and communications, with the aim of improving signposting and keeping complainants better informed. 

• There should be a form of 'fit and proper' approved persons test for people in senior roles in ombudsmen, with the Department for Business, Energy and Industrial Strategy approving appointments.

• Ombudsmen should commit to cooperating with all stakeholders to put the needs of consumers first.

What does the APPG say?

Yvonne Fovargue MP, chair of the APPG, said: "We make a number of suggestions for improvement that could be quickly implemented. But ultimately, we would like to see the ombudsman system overhauled by the Law Commission, who are best able to consolidate and extend the current statutory landscape.

"The ombudsman system has the potential to be the 'gold standard' of alternative dispute resolution if the standards of the rest can be brought up to the standards of the best."

A spokesperson from the Department for Business, Energy and Industrial Strategy said: "It is vital that consumers have access to an effective, accessible and transparent system of redress. Our review of the alternative dispute resolution landscape is looking at how the ombudsman system can be improved, and we expect to publish a white paper later this year. We will study the recommendations of the APPG with interest."