Guidance to the Ombudsman Association Validation Committee

This guidance is provided by the Association’s Executive Committee in order to assist the Validation Committee in making recommendations in respect of applications for membership of the Association. It is subject to review by the Executive Committee, from time to time.

  1. Non-proliferation of Ombudsman schemes in the private sector
  2. The Ombudsman Association’s(OA) Guiding Principles state that:“In the case of private sector schemes, the Association is opposed to the fragmentation of redress schemes within a single industry. The Association prefers there to be a single Ombudsman within an industry. Where more than one scheme is established within an industry, the Association will normally only afford recognition to the scheme or schemes to which a substantial number of firms in the industry belong.”[1]

1.2The principle of non-proliferation is based on a presumption that it is in the interests of consumers for access to redress to be simple and straightforward. The establishment of more than one Ombudsman scheme within an industry can create consumer confusion and uncertainty. The principle is consistent with the general direction of consumer policy in the absence of legislation establishingmandatory ombudsman schemesin all areas of consumer and public services.

1.3When considering applications in relation to the Association’s position on non-proliferation, the Validation Committee will interpret ‘industry’ to mean a Standard Industrial Classification (SIC), as defined by UK and intergovernmental authorities. A full list, including sub-classifications, can be found at Annex A.

1.4The OA Validation Committee will, in relation to the private sector, consider, generally, the following groupings:

  • Retail to include consumer staples (e.g. food, clothing), consumer cyclicals (e.g. housing) electrical, leisure goods. (SIC: G)
  • Professional services to include legal services, financial advice services including accountancy, architectural services. (SIC: K,L,M,N)
  • Transportation to include aviation, rail, freight, taxis. (SIC: H)
  • Health care to include medical, dental and other health advice and services. (SIC: Q)
  • Energy, Utilities and Technology, to include provision of water, electricity, heat, IT services, telephonic services. (SIC: D,E,J)
  • Leisure, to include holidays, bars, restaurants, cinemas, cultural and sporting services. (SIC:I, R)
  • Real Estate activities to include real estate agencies, buying, selling, letting, renting of private and Housing Association real estate. (SIC: L)

1.5The Validation Committeerecognises that there may be significant cross-over between sectors and that certain industries will be difficult to categorise as sector-specific. In such instances, the Validation Committee will consider the overall impact of validation of schemes against the guiding principle of non-proliferation within sectors/industries, taking into account the interests of consumers.

1.6The Validation Committee recognises that the size of a sector may mean that several Standard Industrial Classifications may exist within it. The Validation Committee also recognises that some areas within a sector may require specialist skills that may not be provided in a non-specialist scheme. The Validation Committeemay thereforerecommend recognising more than one scheme within a sector. The Association remains, in principle, opposed to fragmentation of redress schemes within single industries unless further complexity and multiple schemescan be shown to be justified because it is in the interest of consumers.

1.7The Association covers several nations, states and territories and the Validation Committee recognises that multiple schemes might be appropriate within a single sector where those schemes jurisdiction’s correlate to distinct political or geographical boundaries.

1.8The Validation Committee will be guided by the principle of requiring a scheme to have a ‘substantial number of firms’ availing of its services. The Validation Committee recognises that there may be instances where this can be interpreted more fairly as market share. The Validation Committee will consider that, where a scheme within a sector/SIC has a substantial share of the sector within its remit, the validation of other schemes providing the same or very similar service may be contrary to the guiding principles and the interests of consumers. In such situations the Validation Committee may consider whether or not the existing scheme is of a scale that can service the entire sector; whether or not the existing scheme appears likely, within a reasonably short period of time e.g. a year, to serve the entire sector.

1.9In considering these matters, the Validation Committee is conscious thata recommendation not to validate a scheme because it is not thought to be a justifiable proliferation that isin the consumers interest, and a subsequent decision by the Executive to reject an application formembership of the OA, does not prevent any organisationfrom conducting business or providing a redress service. The Validation Committee is also conscious that a scheme wishing to be validated may re-submit an application in light of subsequent developments within the redress landscape of the sector.

  1. Evidence of service delivery in practice

2.1The Validation Committee may recommend to the Executive that a private-sector scheme established on a voluntary basis appears to meet the criteria in theory but it has not yet demonstrated that it does so in practice i.e. the Validation Committee does not have enough information to address adequatelycriteria 1(a), 2(a) and 3(a) in particular.

2.2The Validation Committee may, in such situations, recommend that a scheme not be validated as an Ombudsman member for a period of one year i.e. until the Validation Committee is in possession of at least one annual report from the scheme in order to evaluate its performance against the membership criteria.

2.3If the scheme currently meets the criteria for another category of membership, for example‘Complaint Handler Membership’, it may be admitted into that category, enabling it to take advantage of Association membership and the services provided in the interim.

  1. Re-validation of existing members

3.1Existing members, in both Ombudsman Member and Complaint-Handler Membercategories, should be re-validated on a five-yearly cycle.This corresponds to the minimum tenure of office-holders proposed by the Association.

  1. Expansion by existing members into new sectors

4.1Where a scheme is already approved in a particular sector/SIC and wishes to expand its operations into another sector/ SIC, the scheme, in particular its proposed services to the ‘new’ sector, will be subject to re-validation within a year of its expansion.

4.2In the interim, the Association will require the member to make clear on its website and in prominent places in all materials, which sectors it is currently validated by the Association to operate in (and therefore, by omission, which of its activities are not).

4.3The scheme will be required to demonstrate its coverage of the additional sector in the same way as a first-time applicant. The Validation Committeewill take into account the existence of other schemes in that sector at the time of application/ validation in the normal way.

4.4The Validation Committee may make recommendations to the Executive as to whether it considers that the expansion constitutes, in effect, a second scheme within the umbrella of the existing one and may make recommendations as to separate membership, with the appropriate subscription structure.

4.5The Validation Committee may recommend validation of the scheme’s service to the additional sector or not. For example, where an existing scheme wishes to offer a service within a sector in which another scheme or schemes already provides substantial coverage of the sector, the issue of the guiding principle of non-proliferation will be taken into consideration.

  1. Weighting ofmembership criteria and principles – Ombudsman Members

5.1The Validation Committee will rigorously apply the current membership criteria for Ombudsman schemes[2].The Association’s published Principles of Good Complaint Handling[3], and Principles of Good Governance[4], will guide the Validation Committee in applying the five key criteria:

  • Independence
  • Fairness
  • Effectiveness
  • Openness and transparency
  • Accountability

5.2When considering an application the Validation Committee will not allocate different weighting to the different criteria. The marking system applied by the Validation Committee will be:

  • A = Meets the criteria (Merit)
  • B = Meets the criteria (Pass)
  • C = Does not meet the criteria
  • ? = Insufficient information provided

5.3The Validation Committee will not recommend a scheme for validation if itfails toscore an A or B against the five key criteria. The Validation Committee will provide qualitative feedback to applicants on what changes may be required to meet the criteria, rather than applying a numeric score.

5.4The Association’s published Principles of Good Complaint Handling and Principles of Good Governance provide detailed exampleson how a scheme can meet each criteria. The application form will incorporate clearer indicators under each criterion from the OA’s Principles to assist applicants.

  1. Weighting of criteria and principles – Complaint Handler Members

6.1The Validation Committee will rigorously apply the current membership criteria For Complaint Handler schemes[5]. The Association’s published Principles of Good Complaint Handling, and Principles of Good Governance, will guide the Validation Committee in applying the criteria.

6.2When considering an application the Validation Committee will not allocate different weighting to the different criteria. The marking system applied by the Validation Committee will be:

  • A = Meets the criteria (Merit)
  • B = Meets the criteria (Pass)
  • C = Does not meet the criteria
  • ? = Insufficient information provided

6.3The Validation Committee will not recommend a scheme for validation if itfails to score an A or B against all of the criteria. The Validation Committee will provide qualitative feedback to applicants on what changes may be required to meet the criteria, rather than applying a numeric score.

  1. Weighting in the re-validation of existing members

7.1The scoring system applied in the re-validation process will be the same as for new membership applications.

7.2The existence of validated schemes prior to the application of this guidance will be recognised in terms of a softening of approach in terms of applying the general principles relating to non-proliferation. This is to recognise that it could be unfair, and contrary to the interest of consumers, to invalidate a scheme that meets the criteria and has done so for a considerable time and, in so doing, has established itself as the credible redress scheme for both businesses and complainants.

8.Potential updates to Ombudsman Member and Complaint Handler Member criteria

8.1The Validation Committee will more robustly assess applicants against the Association’s existing Principles of Good Complaint Handling and Principles of Good Governance by asking for additional evidence under the five key criteria in relation to the following ‘best practice’ indicators from the Association’s Principles, alongside the existing indicators[6]:

Independence

  • The Ombudsman should be appointed by an open process without a predetermined outcome.
  • The Ombudsman should explain publicly if decision-making authority is delegated to others within the scheme, and if so what decision-making authority is delegated and to whom.

Fairness

  • Where the Ombudsman cannot or does not accept a complaint, the Ombudsman should inform the complainant of alternative routes they can pursue and where appropriate signpost them to an alternative service.
  • The Ombudsman should take an inquisitorial approach to investigating complaints, which requires assessing what evidence is needed, requesting further evidence from the parties if necessary, and challenging evidence provided.

Effectiveness

  • The Ombudsman should make provision for complaints to be made via post, email, phone or online, within legislative and other constraints, and should provide assistance to those requesting it for the purpose of submitting a complaint.
  • The Ombudsman should publish its procedure for making reasonable adjustments for those accessing the scheme.
  • The Ombudsman should ensure that its documents are written in language that is accessible to users with a wide range of needs, including low literacy.
  • The Ombudsman should publish information on time limits for bodies in jurisdiction to respond to complaints, what format that response should take, and what options exist and time limits apply for commenting on responses and/or further evidence.
  • The Ombudsman should publish information on what outcomes are possible and what remedies are available, including how financial remedies are determined.
  • The Ombudsman should have in place a quality assurance mechanism for its complaint handling and should conduct regular auditing of outcomes.
  • The Ombudsman should ensure that whether the complaint is resolved informally or decided following investigation, the parties are informed in writing of a) the outcome of the complaint, b) where to get further help or to raise questions, and c) how to raise a complaint about the service or make representations against a decision.
  • The Ombudsman should have procedures in place for a) following up on decisions and recommendations to ensure they have been complied with and, if necessary b) what steps to take to ensure compliance.
  • The Ombudsman should demonstrate that it proactively influences the service provision and complaints handling of the bodies in its jurisdiction. For example, through training, producing guidance materials, and providing feedbackon patterns in type and numbers of complaints from the bodies in jurisdiction.

Openness and transparency

  • The Ombudsman should be proactive in raising and monitoring awareness of the scheme among potential complainants, including disadvantaged groups.
  • The Ombudsman should regularly check how easy complainants find it to access their services, for example, by issuing customer satisfaction surveys and consulting focus groups.
  • The Ombudsman should publish a step-by-step guide to its complaint-handling processes.
  • The Ombudsman should set out clearly which bodies are within its jurisdiction, for example publishing a searchable list of bodies on its website.
  • The Ombudsman should publish service standards to inform users of what to expect in terms of response times, staff behaviour, and what constitutes unreasonable behaviour by users of the scheme.
  • The Ombudsman should always be as open as possible about the scheme and its purpose, giving clear and unambiguous information to the public, stakeholders and the media.

Accountability

  • The Ombudsman should publish its procedure for making complaints about the scheme and where appropriate, for requesting review of decisions.
  • The Ombudsman should publish information on complaints about, and legal challenges against, the scheme in its Annual Report.
  • The Ombudsman should report on improvements made as a result of feedback or service complaints.

Annex A – Standard Industrial Classifications

When considering applications in relation to the Association’s position on non-proliferation, the Validation Committee will interpret ‘industry’ to mean a Standard Industrial Classification of Economic Activities (SIC), as defined by UK authorities such as the Office of National Statistics and Companies House. These now fall in line with those used by intergovernmental authorities, such as the European Union industrial classification system, NACE, and the United Nations International Standard Industrial Classifications, ISIC.

The sub-classifications under each heading are listed here:

Standard Industrial Classifications:

A) Agriculture,Forestry and Fishing
B) Mining and quarrying
C) Manufacturing
D) Electricity, Gas, Steam and air conditioning
E) Water supply, sewerage, waste management and remediation activities
F) Construction
G) Wholesale and retail trade; repair of motor vehicles and motorcycles
H) Transport and storage
I) Accommodation and food service activities
J) Information and communication
K) Financial and insurance activities
L) Real estate activities
M) Professional, scientific and technical activities
N) Administrative and support service activities
O) Public administration and defence; compulsory social security
P) Education
Q) Human health and social work activities
R) Arts, entertainment and recreation
S) Other service activities
T) Activities of households as employers, undifferentiated goods and service producing activities of households for own use
U) Activities of extraterritorial organisations and bodies

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