Two financial stories caught my eye when I returned from holiday this week - both concerning computers.
First there was the computer meltdown at TSB, which I hope has been resolved by the time you read this. The second concerned the Financial Ombudsman Service (Fos), which according to the Daily Mail, used an automated process to come to decisions on payment protection insurance claims. Coincidentally, successful claims dropped from sevenin 10 in 2015 to three in 10 this year.
Apparently, the adjudicator enters documents into a system called Navigator and it comes up with a decision. One can only speculate on how a computer can make decisions on cases which must, by their nature, be individual.
Did the person wait more than six months after a final decision to appeal? Reject!
Have we got hundreds of thousands more cases than we can realistically cope with? Reject?
Is it 4.30pm on a Friday and the wine bar is waiting? Reject!
So the idea of independent arbitration is flung out of the window and replaced with tick-box decisions.
I used to be an advocate of Fos, but I am becoming increasingly convinced that it has lost its way. The Ombudsman describes itself as “the UK’s official expert in sorting out problems with financial services”. Well I can’t see that there’s much expertise in typing details into a computer and indiscriminately accepting the decision that is churned out right down to using suggested paragraphs.
On its website, Fos says: “What matters most to us and our customers is fairness. Fairness isn’t only about making sure our answers and decisions are technically right. It’s also about wanting to make what we do feel right. And we do this by listening, thinking and explaining.”
How much listening, thinking and explaining can go on if the answers are churned out by computer? Fos says the computer is only used by junior adjudicators and not when a consumer challenges a decision. But how is a junior adjudicator supposed to spot a dodgy decision? And more importantly, how many consumers just give up because they have been to the Ombudsman and assumed their case had full and fair consideration?
Playing the long game
Never has a fund manager been under such scrutiny as Neil Woodford has in the past year. If the man breaks wind, it is a headline in one business section or another.
Of course, he brought it on himself by setting up his own fund house and carting along thousands of investors and the financial advisers who trusted him with their money, based on his name and record.
So an extended rough period with some disappointing investments is bound to have City scribblers sharpening their pencils. They are correct to highlighting what they see as poor judgement. Investors have a right to know how their money is being managed.
