Channel Islands Financial Ombudsman Annual Report 2021

ANNUAL REPORT 2021

Alderney

Herm

Sark

Guernsey

Jersey

Fairness of outcome and fairness of process...

R.83/2022

TABLE OF CONTENTS ANNUAL REPORT 2021

SUBMISSION LETTER .........................................................................................  1 HEADLINES .................................................................................................................  2 MESSAGE FROM THE CHAIRMAN ............................................................   3 MESSAGE FROM THE PRINCIPAL OMBUDSMAN .........................   5

YEAR IN REVIEW 2021 ...................................................................................... 7

CIFO 2021 HEAT MAP ........................................................................................  20 COMPLAINTS STATISTICS 2021 ............................................................... 21 SUMMARY COMPLAINT STATISTICS 2021 ............................ ............... 33 ANNEXES TO THE ANNUAL REPORT......................................................   39

Annex 1 – Our Staff.........................................................................................................   40 Annex 2 – Governance, Accountability and Transparency ...........................................   41 Annex 3 – Who We Are .................................................................................................... 45 Annex 4 – How We Work .................................................................................................  49

Annex 5 – Case Studies ...................................................................................................  52

Banking .........................................................................................................   53 Insurance .................................................................................... ..................61 Pensions .................................................................................... ...................66 Investment/Funds .................................................................... ...................71

Non-Banking Money Service/Credit ...........................................................74

Annex 6 – Insight Into Our Approach .............................................................................  79

Annex 7 – International Engagement............................................................................ 85 APPENDIX 2021 AUDITED FINANCIAL STATEMENTS .................  86 CONTACT ................................................................................................  BACK PAGE

SUBMISSION LETTER CHANNEL ISLANDS FINANCIAL OMBUDSMAN

Deputy Neil Inder

President

Committee for Economic Development States of Guernsey

Market Building

P O Box 451

Fountain Street

St Peter Port

Guernsey

GY1 3GX

Senator Lyndon Farnham

Deputy Chief Minister and

Minister for Economic Development, Tourism Sport & Culture Government of Jersey

19-21 Broad Street

St Helier

Jersey

JE2 3RR

Dear Minister and President

As you know, the Channel Islands Financial Ombudsman is the joint operation of the Office of the Financial Services Ombudsman established by law in the Bailiwick of Guernsey and the Office of the Financial Services Ombudsman established by law in Jersey.

On behalf of the directors, I am pleased to submit the report and accounts for 2021. These take the form of a shared report accompanied by shared accounts in accordance with the memorandum of understanding between you.

The report and accounts are submitted under section 1(c) of Schedule 2 of the Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014 and article 1(c) of Schedule 2 of the Financial Services Ombudsman (Jersey) Law 2014.

Yours sincerely

David Thomas Chairman

HEADLINES

CHANNEL ISLANDS FINANCIAL OMBUDSMAN

Completed sixth full year of operation

In 2021, 415 complaints were received, up 1% from 409 the previous year

55% of complaints received were outside of CIFO s statutory mandate, up from 47% in the previous year

A notable number of enquiries and complaints related to home emergency insurance claims, for example boiler repair insurance

A notable number of complaints related to payment fraud 269 case files were opened, an increase of 20% from the previous year

360 case files were resolved, over double the amount from the previous year

77% of case files (277) were successfully resolved through informal mediation rather than a formal binding Ombudsman decision, up from 74% (124) in the previous year

45% of case files were resolved in favour of complainants, down from 57% in the previous year

CIFO awarded a total of £701,610 compensation in 2021, with an average of £4,585 compensation per case that warranted a monetary award

CIFO performed an extensive open recruitment process for the appointment of two new directors who joined CIFO s board in early 2022

In 2021, CIFO agreed three additional Memoranda of Understanding with other relevant agencies (data protection and deposit compensation) to help ensure that we work effectively and collaboratively in the performance of our respective mandates

MESSAGE FROM Staff continued to effectively serve the parties to THE CHAIRMAN ctoo emffpelacitnivtse layncdo nredsuoclvt eit sc aressepso. Tnhseibbiliotiaersd f coor ntinued

governance and oversight. Active engagement with

CIFO s stakeholders whose support we gratefully David Thomas acknowledge continued, virtually and in-person.

The Channel Islands Financial Ombudsman (CIFO)

is the joint operation of the independent financial ombudsman bodies established by law in Jersey and the Bailiwick of Guernsey. This is CIFO s report for the calendar year 2021.

The board of directors provides oversight and protects CIFO s independence. Through its ombudsmen and staff, CIFO resolves complaints against financial service providers (FSPs) informally, fairly, and impartially. This helps to underpin public confidence, locally and internationally, in financial services provided in and from the Channel Islands.

CIFO also publishes regular data and impartial information on issues highlighted by cases it has handled. This is intended to help prevent potential causes of future complaints, by informing public and regulatory policy and by encouraging continuous improvement in the sector.

The challenges of the Covid pandemic, including periodic restrictions on staff coming into the office, continued to affect us through 2021. But CIFO once again demonstrated the resilience it had shown in 2020 and improved its efficiency.

Efficiency was demonstrated by CIFO resolving more than double the number of cases compared to the previous year. As a result, the team reduced to a minimum the number of cases awaiting attention that had built up in preceding years as we sought the right balance of resourcing to meet proven workload.

The founding board of CIFO had four members. John Curran s term of office ended in January 2022. CIFO benefitted greatly from his practical experience of, and commitment to, pan-island cooperation. My own term

of office, and those of Debbie Guillou and John Mills, will come to an end in January 2023.

This is the last CIFO annual report that I will introduce, so a brief reflection may be appropriate. International good practice demonstrates that an effective financial ombudsman scheme depends on six key principles:

Independence: visibly objective, impartial, and unbiased

Effectiveness: consistent redress in all appropriate sectors of financial services

Accessibility: well-known, easy to use and free for consumers

Fairness: processes and decisions visibly fair and equitable

Efficiency: good quality of service and value for money

Openness: clear, and open to scrutiny, about its work and the lessons that can be drawn from it

The 2014 legislation in Jersey and Guernsey, under which CIFO was established, successfully built on lessons from independent financial ombudsman schemes elsewhere. But CIFO faces the unique complexities of covering two separate jurisdictions and in receiving more than half its complaints from international customers.

Setting up CIFO from scratch in 2015, an early task was to recruit the Principal Ombudsman. We were fortunate to attract Douglas Melville from Canada, already an experienced ombudsman and then chairman of the International Network of Financial Ombudsmen.

We welcome the support that we have received from both governments and stakeholders, who recognise the value of effective and accessible dispute resolution and actively support CIFO in the performance of its role. Since CIFO opened for business in November 2015 it has become a mature institution that is respected, both in the Channel Islands and internationally.

None of this could have been achieved without the hard work, wisdom and energy of my current and past board colleagues, the Principal Ombudsman and all

of CIFO s staff. I am deeply grateful to them for all they have achieved. The Principal Ombudsman and his team have consistently responded to challenges, embraced change, and effectively performed their roles whatever the difficulties.

From January 2022, we welcomed two new directors: Antony Townsend and Robert Girard. Both of them have already demonstrated their value to the organisation. Two more new directors will be appointed during 2022, to serve from January 2023 and one of the directors will be appointed as chair to succeed me.

As the founding directors pass the baton to a new board, we are confident that they will find ways to improve upon what has been built to date in order

to effectively meet the ever-changing needs of the dynamic financial sector in the Channel Islands and its customers. We wish them, the Principal Ombudsman and all the team every success.

MESSAGE FROM

THE PRINCIPAL OMBUDSMAN

& CHIEF EXECUTIVE

Douglas Melville

In our 2020 Annual Report last year, CIFO included a five-year retrospective on the period since CIFO commenced operation in 2015. There was much to share about our first five years. We highlighted the effort of CIFO s staff, management, and board of directors, as well as all of our stakeholders, to lay the foundation for a sustainable financial dispute resolution service in the Channel Islands. What was also clear from that retrospective is that there is no final destination for this journey we embarked on

in 2015. Just as the financial sector in the Channel Islands and the global economy are dynamic, so must our mandate and office be to respond to unforeseeable challenges like surges in complaint volumes, market turmoil, and global pandemics that restrict how we work. If there is a word I have heard used more often since the onset of the Covid pandemic than any time before, it is resilience.

As we look back on our second consecutive year

of operation under the shadow of a global health emergency, resilience has taken on a more tangible meaning for our team.

Perhaps counterintuitively, CIFO had its most productive year to-date in 2021, coinciding with CIFO s busiest quarter ever for receipt of new in-mandate complaints (Q4 2021). Despite the continued operational challenges of alternating between home and office-based work in line with local government recommendations, CIFO resolved

over twice as many case files in 2021 as in 2020. This has resulted in reducing to a minimum the number of cases awaiting attention that had accumulated over

the years since CIFO s creation when gradual increases in case handling capacity chased complaint volumes referred to our office.

I attribute this welcome result in 2021 to several factors. One key factor was the willingness of financial service providers in the Channel Islands, and their customers, to work with our team at the early mediation stage

to reach agreement on what would be a fair and reasonable resolution of each complaint. Having a

high proportion of case files resolve through early mediation is far more efficient and generally enables faster resolution for the parties, avoiding the need for our team to prepare detailed written provisional and/

or final Ombudsman decisions. The second key factor was the appointment of several highly experienced part-time ombudsman professionals by CIFO s

board of directors to wield the statutory decision- making authority under our laws in Guernsey and Jersey. Their collective skills, sector knowledge, and decades of financial dispute resolution experience

with the UK Financial Ombudsman Service (UK FOS) and predecessor financial sub-sector ombudsman schemes in the UK has been transformational for CIFO, adding significant flexible capacity to meet our needs. I am mindful that the pilot project to engage such experienced contractors arose from our 2019 consultations with industry stakeholders on ideas

to address the high volume of complaints referred

to CIFO, particularly from the banking sector. Both of these factors illustrate the resilience referred to above. Such willingness to adapt and consider new ideas and approaches to meet the shared challenge is a hallmark of a learning organisation that is willing to confront challenges, embrace change, adapt as necessary, and yes, learn continuously.

Having demonstrated our ability to respond to such challenges, we look forward to focusing on refining

our workflow and tightly managing the time taken at

each stage to drive down the time it takes to achieve resolution for complaints referred to our office. This

will test our core team in Jersey, including the new

additions to our team that will join us in 2022, as well  5

as our part-time ombudsmen. It will also require the  One of CIFO s four founding directors, John Curran, cooperation of industry stakeholders to provide CIFO  reached the end of his term in January 2022. The

with timely responses to our requests for their files  others, including our founding chair, will reach the end and to queries that arise during our investigation of  of their terms in January 2023. A broad search attracted complaints. Improving the timeliness of the overall  a large number of interested applicants from across complaint handling process will benefit everyone  the Channel Islands, the UK, Ireland and beyond. Two as it is always easier to resolve a dispute when the  appointments have already been made with two more information is easily accessible, and the personal  expected before the end of 2022.

recollections are fresh.

CIFO staff and management join the board of directors Our complaint handling work will doubtless be affected  in thanking John Curran for his thoughtful guidance by the introduction of pensions regulation in Jersey  and support as one of CIFO s founding directors. His in 2022. Through a mix of engagement with trust and  previous experience with pan-island entities gave him pension experts, staff seminars, and formal legal  a particularly insightful perspective on CIFO s unique training, CIFO has been actively developing its level of  role and challenges. His support of this office and its expertise in pension complaint issues to effectively  people during CIFO s establishment and the first six resolve not only the pension complaints already within  years of its operation were greatly appreciated. We CIFO s mandate, but also those complaints likely to  wish him well.

be added to our mandate from 2022 onward about

occupational pension plans and the island s large  As for most workplaces, it has not been an easy past public sector pension plans. Again, our office will adapt  two years for our team. It is good to be back in our and learn. office working together, supporting each other, and

sharing the perspectives that help us calibrate our

Our work to leverage technology to continue to  views on fair outcomes for the difficult situations that engage effectively with all our stakeholders kept us in  come to us for resolution. I thank them all for their touch when in-person meetings were not permitted.  contributions. I am immensely proud of our team s Even when in-person meetings became possible  performance in 2021, our demonstrated resilience and again, virtual meetings were still preferred in some  ability to stay focused on the important public interest cases given public health and cost considerations.  mandate we perform each day for the collective

The success of our second consecutive virtual  benefit of financial consumers, the financial sector, and annual stakeholder meeting in July 2021, which  the reputations of the international financial centres of blended video presentations from CIFO s board and  Jersey and the Bailiwick of Guernsey.

management with a live question and answer session,

was a welcome surprise. We reached many more

stakeholders than our previous in-person meetings

in Guernsey and Jersey could have reasonably hoped

to achieve. Our first major refresh of our website

since inception in 2015 was also done in recognition

that accessibility, transparency and effective

communication through remote means had taken on

increasing importance.

One of the other important tasks CIFO undertook in 2021 was to run the search process to identify new directors for CIFO s board (the combined governance bodies of the Office of the Financial Services Ombudsman (Jersey) and the Office of the Financial Services Ombudsman (Guernsey)), which we refer to as the two OFSOs.

YEAR IN REVIEW 2021

BUSINESS OPERATIONS Covid impact persisted

In some ways, 2021 looked and felt much like 2020 to our team

and the various stakeholders we work with on a daily basis as the Covid pandemic continued. The sustained government-imposed restrictions and resulting economic impacts remained familiar factors to contend with in 2021. However, many of the markets served from the international financial centres in the Channel Islands had already acclimatised to the challenges of operating in new ways leveraging videoconferencing technology and operating from remote locations. Many, if not most financial service providers (FSPs) in the Channel Islands still had many of their teams working from home. CIFO was no different as the welcome return to the office earlier in the year was followed with a renewed call to work from home as infection rates surged during the year. Finally, the mid-August return to the office saw our team able to resume normal operations and benefit from the informal and collegial contact that helps us to calibrate our perspectives on complex cases and ensure that our collective view of what constitutes fair and reasonable outcomes to financial customer complaints remained consistent across the team and across all the various financial sub-sectors active in the Channel Islands.

For those FSPs that continued to have their staff members work remotely, this has caused some to struggle to provide their files to CIFO on a timely basis for our review. As public health-related

restrictions ease in 2022, we anticipate more FSP staff will return to their offices and this challenge will ease.

Throughout 2021 we were able to maintain effective contact with all stakeholders and continue to operate at a level that even exceeded our own historic norms. This is a testament to the resiliency that developed when sudden change was forced upon offices like ours by the Covid pandemic and the resulting government restrictions. It also demonstrates the value of taking a flexible approach to resourcing our office with the required skills and experience.

Complaint volumes

2021 complaint volumes were virtually the same as in 2020 with 415 new complaints received (up 1% from 2020) but in-mandate case files opened for investigation were 269, up 20% from 2020. Q4 of 2021 was the busiest quarter since CIFO s inception for new case files. This increased case file load had been anticipated and, despite the persistent operational challenges posed by Covid, steps taken to increase our case handling capacity resulted in 360 case files resolved, more than double the volume of the previous year. As a result, the number of case files awaiting resolution was significantly reduced. A detailed overview of the 2021 year from a statistical perspective, including the products, complaint issues, and FSPs involved, is provided elsewhere in this annual report.

2021 is our second year providing summary complaint statistics on an FSP-named basis. No comments were received in 2021 after the first publication of the 2020 data table in May of 2021 and the launch of public access to 2018-2020 FSP-named summary complaints data through online search on CIFO s website.

Staffing and training

During 2021, there were a couple of departures from the core case handler team in Jersey which necessitated increased reliance on the part-time experienced ombudsmen appointed by CIFO s board of directors to exercise the statutory decision-making authority granted under our Guernsey and Jersey legislation. An additional part-time ombudsman, Mandy Maycock was appointed in August of 2021 joining the existing group of part-time ombudsmen comprising David Millington, Clare Mortimer, and Mike Ingram. All four bring many years of financial complaint handling experience with the UK Financial Ombudsman Service (UK FOS). Searches were conducted in late 2021 for Jersey-based case handlers which will result in several new appointments to our team in the first half of 2022.

Staff training was necessarily conducted online for much of the 2021 year with several team members participating in online training courses in dispute resolution skills. Other training included use of information technology for tracking workload and performance. Two training sessions with a local Channel Islands industry expert in pensions and trusts were held to brief the CIFO team on key elements of this complex business area that is increasingly where CIFO is encountering complex customer complaints.

Service complaints

An ombudsman decision on the merits of a case is final, subject only to judicial review. But, as explained on our website a party who is concerned that the standard of service provided by CIFO did not meet with their expectations (for example, because of delay) may submit a service complaint to the Principal Ombudsman. If the party is unhappy with the Principal Ombudsman s response, they can raise the issue with the chair of the board. Data on service complaints (3 in 2021, all of which were escalated to the chair) are reported to the board to ensure transparency and facilitate board oversight from a service quality assurance perspective.

STAKEHOLDER OUTREACH Online outreach activities

With all the new online videoconferencing skills learned in 2020, maintaining active stakeholder engagement through remote technology platforms has become the new normal and was leveraged to good effect in 2021. The ease of on-demand videoconferencing and the ability to have effective multi-party broadcasts followed by remote live question and answer sessions has changed our approach to ensuring that CIFO can effectively reach its stakeholders across the Channel Islands and beyond. This has enabled even more people to engage with our office than before when the time and expense involved in having in-person meetings previously meant that fewer stakeholders would attend our outreach events. Now that face- to-face meetings are resuming, CIFO s board and management

will be considering how to leverage the best of both modes of engagement (in-person and remote) going forward, confident that we can continue to engage with our stakeholders regardless of whatever future challenges arise that may limit face-to-face interaction.

CIFO met regularly throughout the year with community bodies on both islands, governments, and regulators. Our annual stakeholder meeting in July enabled representatives of CIFO s board and management to present on the previous year s activities and to answer questions from stakeholders in a live online Q&A session.

Throughout 2021, several online meetings were also held with industry stakeholders, including several to discuss CIFO s approach to authorised push payment fraud complaints and efforts to improve the timeliness of the overall customer complaint handling process of which FSPs and CIFO are both a part.

Newsletters

CIFO continued to raise important issues alongside the regular publication of our quarterly statistics. In January of 2021, CIFO issued a newsletter with guidance to local Channel Islands microenterprises about business interruption insurance coverage. This was done in anticipation of cases arising from Covid-related claims and in response to the significant attention the issue

was attracting in the media. Later in the year, we addressed a newsletter item to industry stakeholders on the potential for confusion when FSPs continued to engage with complainants as their complaint came to CIFO for review. Such informal guidance helps to keep stakeholders informed of issues that arise through our work. It reflects our commitment to be transparent and improve the efficiency and effectiveness of the end-to-end complaint handling process.

Website refresh

To supplement our active outreach activities, we also took the opportunity in 2021 to review our website which had not seen a significant refresh since we commenced operation in late 2015. We updated the content, amended the online forms and changed the website format to make it easier to navigate. We note that more complainants come to our office having already looked at our published decisions and case studies to see how their own situation aligns to previous reviews conducted by our office. CIFO also updated its comprehensive general approach to compensation of losses and published guidance for FSPs on the provision of complaint file documentation.

New memoranda of understanding (MoUs)

Behind the scenes of our day-to-day complaint resolution activity, we continually seek to enhance our interaction with other agencies whose own areas of responsibility can support CIFO, or benefit from the insights arising from CIFO s complaint handling. In some cases, issues arising in complaints reviewed by CIFO suggest possible breaches of law or regulation overseen by other bodies. Data protection is a common issue where referral of the complainant to the appropriate data protection authority enables a

review of the FSP s adherence to data protection regulations while CIFO considers issues of appropriate redress due to the economic loss or distress and inconvenience caused to the customer. Many of these interactions are already the subject of memoranda of understanding. During 2021, CIFO entered into additional MoUs with:

The Office of the Data Protection Authority (Guernsey) The Guernsey Banking Deposit Compensation Scheme The Jersey Data Protection Authority

All three of these new MoUs can be found on CIFO s website. FUNDING

Levies and case fees

2021 was a relatively uneventful year from a funding perspective. The levy and case fee structures of CIFO s funding model remained unchanged with the levies being the same for like types of Jersey and Guernsey FSPs, calculated in the same way as in 2020 to raise the amounts needed to cover CIFO s approved 2021 operating budget. The increased amount to be raised by levies in 2021 over 2020 was in line with inflation as calculated by Jersey RPI.

Collection of unpaid levy

Again in 2021, CIFO had difficulty in obtaining payment of the levy from one particular FSP (the same one as in the previous year) and had to resort to Petty Debts Court in early 2022 to enforce payment. In this case, unlike the case resolved in 2021 where the FSP settled at the last minute, this case proceeded to Magistrate s Court where CIFO was granted judgment. Enforcement of the court judgment will proceed through the Jersey Viscount s Office. In this way, CIFO ensures a fair funding environment for all FSPs by ensuring that each pay their share of CIFO s operating costs as required by law.

Expense management

As in 2020, the two challenging expense areas remain the escalating cost of staff health insurance cover and director and officer liability insurance. Both of these expense items have been growing annually at rates that are multiples of Jersey RPI. As CIFO s budget is, to a large extent, staff-related costs, the increasingly intense war for talent in Jersey is also putting significant upward pressure on salaries and benefits in specialised areas which are comparable to several CIFO staff roles (e.g., compliance, legal, and finance). This has become evident in CIFO s recent recruitment searches for Jersey-based positions.

BUSINESS RISKS

At every meeting of CIFO s board of directors, the board reviews with management the status of the organisation from the perspective of financial risk (sufficiency of resources to meet current and projected obligations), operational risk (ability to effectively handle current and anticipated complaint volumes and complexities), and stakeholder relations risk (covering the governments, regulators, industry sectors, and consumer and public groups across the Channel Islands).

During 2021, CIFO s board of directors also continued its regular practice of in-depth review of various aspects of CIFO s operation from a risk perspective. This year the board conducted the following reviews:

The integrity of CIFO s systems infrastructure and cybersecurity.

CIFO s accounting policy for case-related expenses in the context of CIFO s workload analysis.

Quality control measures in place for decisions made at various stages in CIFO s complaint resolution process.

Service complaints involving CIFO s performance of its role. Possible legislative changes to CIFO s enabling legislation

or other laws that impact CIFO s statutory mandate for recommendation to both governments.

During 2021, a decision was taken to supplement the regular board agenda items and in-depth reviews with a comprehensive risk assessment methodology and dashboard developed to provide a continual perspective for directors on the risks affecting CIFO. The identified risks are rated for both inherent and residual risk and noting risk mitigation measures in place. The dashboard is updated and reviewed quarterly. The risk categories reviewed include:

Operational risk Liquidity risk Conduct risk Outsourcing risk

As at the close of 2021, the four greatest risks facing CIFO as identified by management, the implications of each, and the mitigation in place to address each of them are:

1. Insufficient case handling resources (quantity, skills, experience) to meet requirements. This could undermine CIFO s ability to maintain decision quality, meet complaint volumes, and maintain credibility with stakeholders. Controls include the regular board review of internal complaint handling statistics.

1. Mitigation: Availability of experienced financial ombudsman resources on contract as required.
2. Mitigation: On-going staff training in essential skills and subject matter areas.
3. Mitigation: Regular contact with key industry stakeholders regarding their internal complaints experience (early warning system).

2. Insufficient financial resources because of an unexpected surge of complaints. This could affect CIFO s ability to meet short-term obligations and undermine CIFO s reputation with funding stakeholders. Controls include regular board oversight of financial reports and cash flow projections.

1. Mitigation: Maintenance of an operating reserve as determined by the board of directors each year and replenished, as required, through CIFO s annual budget and levy setting process.
2. Mitigation: £250,000 operating line of credit with CIFO s bank for use only with board of directors prior approval.
3. Mitigation: Ability to issue an intra-year supplemental levy notice (subject to consultation), if required, or accelerated invoicing of case fees.

3. Judicial review (JR) of CIFO decision on an error of fact, law or procedural fairness resulting in unplanned legal expenses and potentially a court judgment against CIFO. Intra-year financial impact of JR legal costs could be significant if not covered by insurance. In case of an unsuccessful defence of a JR, award of an FSP s costs against CIFO could be significant if not covered by insurance. Loss of a JR could undermine CIFO s reputation with stakeholders.

1. Mitigation: Quality control measures in place regarding preparation of CIFO ombudsman determinations (final decisions).
2. Mitigation: Director & officer liability policy in place that includes coverage for legal costs arising from a judicial review.
3. Mitigation: Maintenance of an operating reserve as determined by the board of directors each year and replenished, as required, through CIFO s annual budget and levy setting process.
4. Mitigation: £250,000 operating line of credit with CIFO s bank for use only with board of directors prior approval.

4. Data breach leading to compromise of CIFO core systems, loss of case file data, or exposure of sensitive complainant or FSP information could undermine CIFO s operating capability, reputation with stakeholders, and lead to possible public sanction by data protection regulators.

1. Mitigation: IT infrastructure and policies developed with outside expert input.
2. Mitigation: Cloud-based file storage accessed via 2-factor authentication.
3. Mitigation: Cyber Essentials Plus advanced cybersecurity certification in 2019. Ongoing external assessment on a quarterly basis.
4. Mitigation: Regular staff training in cybersecurity policies, procedures, and good practice.
5. Mitigation: Annual independent audits to reconfirm cybersecurity certification (last conducted in 2021).
6. Mitigation: Insurance coverage in place for liability and remediation costs associated with a possible data breach.

EMERGING ISSUES

Each year CIFO encounters the usual mix of common complaints about accounts and payment transactions, investment suitability and insurance. We seek to identify in our annual report those new and emerging issues that we see in the complaints referred to our office.

Banking - Authorised push payment (APP) fraud

Again in 2021 fraud complaints remained common and were amongst the most difficult. Sophisticated scams of various types convince customers to authorise payments from their accounts to fraudsters in the UK and abroad. Such complaints sadly increased during the global pandemic as less technology-savvy individuals were suddenly forced into the online banking and payment worlds as fraudsters lurked taking full advantage of the situation.

Further complicating things, email as a means of communication is now widely recognised as not being secure. Fraudsters have hacked the accounts of businesses or their customers and waited for an opportunity to substitute fraudulent payment instructions to divert large payments for such things as home purchases or significant investments.

To help combat these types of payment fraud, most banks have added clear and distinct warnings to their online payment screens, some where the customer must check a box acknowledging having read the warning. Warnings are of assistance in helping avoid fraud, but the FSPs will also point to such warnings when frauds still happen to assert that customers are responsible when they make authorised payments to fraudsters. In this office, the question is usually about who is responsible for the losses incurred to fraud, the FSP or the customer. CIFO s published case studies and decisions involving APP frauds illustrate the two-step approach that CIFO takes to such complaints. The first test is whether the FSP ought to have reasonably been aware and done something reasonable to inquire about or block the suspicious transaction or pattern of transactions. The second test is whether the fraud would, on the balance of probabilities, have been avoided if the FSP had done something reasonable to inquire about the transaction or pattern of transactions.

It will take the combined efforts of all stakeholders (FSPs, regulators, consumer groups, law enforcement, and the courts) to help customers and FSPs to stop these tragic occurrences before they come to our office as a fight over which victim, the customer or the FSP, is responsible for covering the funds lost to the criminals.

Banking account closures

Account closure complaints tend to come in two flavours.

One flavour is the single account closure due to a customer s inappropriate use of their bank account or the customer s failure to provide updated verification of personal information to enable the bank to meet its regulatory obligations to demonstrate that it knows its client . The second flavour is perhaps attributable to CIFO being in an international banking environment like the Channel Islands. This is the large-scale closure of many customer accounts due to a risk management decision by the bank to exit a market or exit customers maintaining residency in certain jurisdictions.

During Covid, we saw complaints from individuals who were unable to meet their bank s request for proof of identity and residency due to Covid-related restrictions limiting movement and access to bank branches, professional services like lawyers, copying services, and post offices. More recently we are seeing a resurgence of programmes of mass account closures by FSPs.

For account closure situations, CIFO will generally view a bank being free to decide who it wishes to do business with. Therefore, a bank can choose to close a customer account, subject to adequate notice but without requiring a reason be provided to the customer. Issues around the ability of customers to meet the bank s requirements, to move their assets, and to contact their bank all can have a role in CIFO s determination of what would be fair and reasonable in the individual circumstances of each complaint, so most complaints tend to involve such unique factors rather than the bank s act of account closure alone.

Pensions pension plan transfers

Pension plan transfers have become a prominent issue for the

UK regulators and in the media. CIFO has dealt with a number of complaints involving pension plan members who seek to transfer their pension plan to a new provider in another jurisdiction. In cases where there is an issue raised about the transfer, plan members or their independent financial advisors bring a complaint to CIFO in an attempt to pressure their current pension plan provider to process the requested transfer. This can surface several challenges that CIFO has previously highlighted about the conflict of interest that both transferring and receiving pension plan providers have, the sometimes conflicted nature of pension transfer advice from independent financial advisors, and the interest of financial managers who may reinvest the underlying pension plan assets once transferred. In some cases, CIFO has intervened to educate the complainant about the concerns surrounding their proposed plan transfer which enabled a resolution to the complaint. In other cases, intractable issues between pension providers, each seeking to minimise their liabilities for the proposed transfer, prompted CIFO to refer the parties to court to resolve the dispute between the two pension providers.

Pensions pension trustee responsibility

The use of trusts as the legal structure for the provision of pension plans to customers raises questions about the duty of the trustee where other parties each perform a discrete function within the overall pension product. This is particularly of interest where the pension provided is a low-cost commoditised pension product sold to the customer by their independent financial advisor and customers complain to the trustee about errors made by other entities (e.g., financial managers). The potential liability attaching to the fiduciary duty of a trustee offering such low-cost pension products, usually set out and strictly limited by the trust deed, is an issue with significant implications for industry stakeholders. Recent court cases in Guernsey, the UK, and elsewhere are gradually clarifying certain aspects of trustee liability for pension plans in various circumstances. These legal developments, regulation, and general industry practice, are all factors that CIFO notes in coming to a decision of what would be fair and reasonable in the circumstances of each individual complaint.

Investments issues involving basis of determining suitability and losses incurred

Unsuitable investment advice is a common complaint theme encountered by financial ombudsman offices, including CIFO. Complaints commonly have investors arguing after the fact that money-losing investments were not suitable. FSPs commonly argue that higher risk investments can be suitable in the context of an overall investment portfolio with a balanced mix of lower and higher risk investments designed to provide a better return from a diversified portfolio with an overall suitable risk profile. Questions arise continually about the application of the portfolio approach. It can become particularly challenging to define the boundaries of the investor s portfolio for the purpose of CIFO s

analysis when the investor may have investments held across multiple providers and multiple accounts, sometimes including personal, joint, pension, and holding company accounts. In a more recent case, the inclusion of the large value of an investor s real estate holdings by the independent financial advisor diluted the portfolio making the allegedly money-losing high-risk investments complained about appear to be a smaller proportion (and therefore arguably suitable) within the overall investment portfolio. In other cases, investments were recommended or selected for customer portfolios by an investment firm with an economic interest in parking those securities in their customers accounts. Investment losses arising from a firm s failure to properly manage such a conflict of interest could not be excused by a portfolio approach where recommendations to invest in money-losing high- risk securities are defended as having otherwise been suitable investment recommendations.

Insurance home emergency complaints

In 2021, the number of complaints opened involving insurance increased significantly to 115 from 77 in 2020. We had remarked previously on the relocation to Guernsey of several UK providers of different types of home insurance covering such things as boiler repair and bicycle theft. As only new policies written following those firms relocations to Guernsey fall with CIFO s mandate, it was expected that there would be a time lag before we received complaints about such insurance claims. In 2021, those complaints began to emerge in significant numbers and volumes are expected to continue growing. It has already caused insurance complaints to leap into the second-place spot for financial sector complaints in the Channel Islands behind banking complaints.

The expected complaint themes that did not emerge

Surprisingly, two types of complaint that we had expected to see more of in 2021 did not materialise. This could be due to the specific context surrounding each of these complaint areas. It is also possible that FSPs had handled these situations well.

With the number of loan payment deferrals agreed by FSPs during Covid, Covid-related disruption to household employment, and the increase in interest rates, we expected to see a spike in lending and credit-related complaints during 2021. We are aware that in many cases loan payment deferrals were extended to account for the lingering effects of Covid. With restrictions falling away in the first half of 2022 in the Channel Islands and major jurisdictions such as the UK and EU, such credit-related complaints might yet emerge in 2022.

The second area where anticipated volumes did not materialise is business interruption insurance. Given the profile this issue attracted in the UK during the Covid pandemic, we expected more complaints from local microenterprises who had lost revenue due to the government-imposed restrictions on retail business activity. The small number of complaints referred to CIFO may be a result of delays in getting claim decisions made by the FSPs, meaning that complaints may well emerge at a later date. It is also possible that the low volume of complaints is due to the small number of insured microenterprises in the Channel Islands, insurance policies that

do not include such cover, or insured microenterprises that are not aware they had such cover. The complexities of local government Covid support programmes for retail businesses and the possible impact of insurance claims on such benefit entitlement may have also been a factor.

LOOKING AHEAD TO 2022 Transitioning to a post-Covid environment

As Covid continued to evolve as a public health and economic concern, 2021 brought new uncertainties and financial stress to retail financial consumers in the form of rising inflation and interest rates. As 2022 began, inflation and interest rates remained major topics of concern. Then we saw the addition of armed conflict in Ukraine causing significant disruption to global investment markets and price increases, notably in fuel for domestic use, giving rise to concerns about a cost-of-living crisis.

Market drops generate losses to consumers investment accounts or pensions causing distress and raising questions of investment suitability. Interest rate increases can affect the ability of consumers to keep up with debt payments or consolidate existing debt. Such uncertainty and change will inevitably generate customer complaints.

Despite the operational challenges brought on by Covid, and with the strong support of our experienced contract part-time Ombudsmen, CIFO was able to effectively deal with the accumulated case file backlog and anticipated increases in case file volumes. This had the desired effect of significantly reducing the number of cases awaiting attention. In 2022, our attention will turn to improve the timeliness with which CIFO completes its reviews of complaints. We look forward to welcoming new members of the Jersey-based team to enhance our core case handling capacity to meet these new challenges.

CIFO mandate changes occupational pensions

In early 2022, the Government of Jersey introduced the first phase of legislation to regulate the provision of pensions. The second phase, proposed for later in 2022 will clarify CIFO s mandate for resolving complaints about occupational pension plans (including the large public sector pension schemes in Jersey) explicitly adding them to the broad list of financial services provided in or from the Channel Islands that are already covered by CIFO s statutory mandate. Some pension complaints can be quite complex and may occasionally require expert advice to support the effective handling of such complaints. CIFO will be reviewing the impact of this proposed mandate change for our staffing, funding model and legislative framework to ensure that we have the required resources and to minimise any possible cross-subsidisation of costs to resolve pension complaints by FSPs in other financial sub-sectors.

Regulation of lending and credit

Regulation of lending and credit is still anticipated in both Guernsey and Jersey. This area of business activity is already covered by

CIFO s mandate. As regulatory expectations are one of the things CIFO considers in coming to a decision on what would be a fair and reasonable resolution to a complaint in the circumstances, the new regulation will assist by providing clarity of market conduct expectations in Guernsey and Jersey for the broad range of FSPs active in this area playing various customer-facing roles (e.g., lender, broker, promoter/introducer, collections agent, etc.).

CIFO operations secure file transfer

The ability to securely exchange sensitive information is a key enabler of CIFO s role. Complainants and FSPs both interact with our office through remote channels and need to send sensitive information necessary for our review of the underlying details that gave rise to the complaints. The number of FSPs that CIFO deals with, many having their own internal security restrictions on data and file transfer, has posed an operational challenge. With the general concerns about the lack of security around normal email, alternatives have been explored, including leveraging encryption and the secure file transfer abilities of our existing office software. CIFO is in the process of changing its approach to file transmission to ensure we maintain appropriate security for the sensitive information we exchange with the parties to a complaint while maintaining accessibility for complainants and an efficient process that can work with the wide range of FSPs we interact with more frequently.

CIFO operations dealing with sensitive information

In some complaints, the subject matter underlying the FSP s interaction with the complainant involves sensitive information (such as suspicions about money laundering) that by law can only be disclosed to specified agencies, which does not currently include CIFO. CIFO has sought a means to balance the need to protect sensitive information with the need to ensure we have a solid evidential basis for the decisions we make. A new approach was developed in Jersey, based on discussions in 2021, that will be piloted in 2022. If successful, it will be adopted as standard operating procedure going forward and a similar solution will be sought for Guernsey-originating complaints.

Environment and sustainability policy

While CIFO is a small office performing an important public interest mandate, we need to consider our broader social responsibilities in areas such as the environment and sustainability. In 2022, we intend to have CIFO s board and management turn their minds to CIFO s environmental impact and the development of policies to demonstrate CIFO s commitment to sustainability.

CIFO governance

There were four founding directors of CIFO. John Curran s term expired at the end of January 2022. The terms of David Thomas (the chair), Debbie Guillou and John Mills will expire at the end of January 2023.

To secure some overlap, in the interests of maintaining continuity, Antony Townsend and Robert Girard were appointed by the two governments as additional directors from the end of January 2022 following an open recruitment process overseen by the Jersey Appointments Commission.

During 2022, two further directors will be appointed, and a chair appointed from among the directors, to serve from the end of January 2023.

As a result of benchmarking the director roles against comparable roles in the Channel Islands, an increase in the annual director fee from £6,000 to £7,500 (the first such increase since CIFO s creation in 2015) was agreed by both governments from Q4 2021.

Lihou Island, Guernsey

HEAT MAP

ORIGIN OF CIFO COMPLAINANTS IN 2021

As the financial ombudsman for the international financial centres

in Jersey and the Bailiwick of Guernsey, CIFO s mandate covers customers anywhere in the world whose non-exempt financial services are provided in or from the Channel Islands. The heat map and table below demonstrate the international nature of CIFO s work and the global reach of the Channel Islands financial sectors.

© 2022 TomTom, © 2022 Microsoft Corporation, © OpenStreetMap

Legend (1.) Between 1 and 5 (2.) Between 6 and 10 (4.) Between 26 and 50 (5.) Between 51 and 100 (6.) Over 100

Jurisdiction # Jurisdiction # Jurisdiction #

United Kingdom 156 Jersey 88 United States of America 74 Guernsey 34 South Africa 10 Spain 10 Netherlands 8 Thailand 8 France 7 Hong Kong 5 United Arab Emirates 5 Italy 4 Australia 3 Canada 3 Ireland 3 New Zealand 3

Philippines 3 Switzerland 3 Ukraine 3 Cyprus 2 Germany 2 Ghana 2 Isle of Man 2 Malaysia 2 Portugal 2 Qatar 2 Singapore 2 Zimbabwe 2 Austria 1 Brazil 1 British Virgin Islands 1 Bulgaria 1

Denmark 1

Gambia 1

Gibraltar 1

Greece 1

India 1

Israel  1

Jamaica 1

Japan 1

Malta 1

Morocco 1

Nigeria 1

Poland 1

Russia 1

Sri Lanka 1

Taiwan 1

Turkey 1 20

This presentation of CIFO s complaints statistics COMPLAINTS represents the sixth full calendar year of operation for

STATISTICS CIFO and supplements the quarterly complaints statistics

regularly published by CIFO on our website.

2021

The volume of in-mandate complaints received by CIFO in 2021 was 20% higher than in 2020. This meant the workload faced by CIFO staff created by new in-mandate complaints increased moderately compared to the previous year, well above the rate of inflation.

Complaints determined to be in-mandate for CIFO to review are referred to as case files. The number of case files successfully resolved by either mediation or Ombudsman determination increased by 114%, up

to 360 from 168 in 2020. CIFO continues to resolve the majority of complaints through informal mediation, with over three-quarters (77%) of complaints now being resolved without the need for a formal Ombudsman final determination, up from 74% in 2020.

In 2021, the proportion of complaints resolved in

favour of complainants decreased. Upheld complaints now represent 45% of the proportion of complaints. Complaints not upheld (i.e., in favour of the financial service provider) increased from 43% in 2020 to 55% in 2021. While the proportion of complaints upheld can vary from year-to-year, there was no identifiable reason for this change in 2021.

Also of note, was the significant decrease in the average amount of compensation awarded. In 2021, CIFO awarded a maximum compensation amount of £104,351, less than in previous years.

The thematic nature of complaints in 2021 was similar

to what CIFO experienced in 2020 looking at the products and issues complained about. Administrative error and non-payment of insurance claims, account remediation by firms seeking to meet their regulatory know your client requirements, and disputes over fees charged for various products and services continue to be the predominant issues giving rise to complaints. Geographically, CIFO continues to receive complaints from all over the world and received proportionally fewer complaints from Channel Islands residents in 2021, down to 29% of total complaint volumes from 30% in 2020.

Please note that percentages may not add to 100% due to rounding.

2021 COMPLAINTS STATISTICS ANALYSIS

Table 1: Complaints Received - Location of Financial Services Provider

This section of the 2021 statistics analysis Jersey 233 56% provides detailed information concerning all

complaints about a financial service provider Guernsey 152 37%

that have been received by CIFO whether or

UK & Rest of World 30 7% not they are ultimately confirmed as falling

within CIFO s statutory mandate.

Grand Total 415 100%

Of the 415 complaints received by CIFO in 2021, 385 (93%) were against financial services providers operating in or from the Channel Islands, 56% in Jersey and 37% in Guernsey. 30 (7%) were against financial services providers that operated in or from the UK or the rest of

the world. When CIFO receives a complaint against a financial service provider operating outside the Channel Islands, it will be referred

to the most appropriate financial Ombudsman service or regulator within that jurisdiction.

Table 2: Complaints Received - Location of Complainants

Jersey 88 21% Guernsey 33 8% UK & Rest of World 294 71% Grand Total 415 100%

CIFO reviews complaints about financial services provided in or from the Channel Islands. The complainants can be from anywhere in the world. Of the 415 complaints received by CIFO in 2021, 121 (29%) were from complainants residing in the Channel Islands, 21% in Jersey and 8% in Guernsey. 294 (71%) were from complainants residing outside the Channel Islands; in the UK or the rest of the world.

Table 3: Complaints Received - Type and Origin of Complainant

Jersey Guernsey UK & Rest of World Total Consumer 73 83% 26 79% 287 98% 386 93% Microenterprise 8 9% 6 18% 2 1% 16 4% Other 6 7% 0 0% 4 1% 10 2% Charity 1 1% 1 3% 0 0% 2 1% Trustee 0 0% 0 0% 1 0% 1 0% Grand Total 88 100% 33 100% 294 100% 415 100%

Of the 415 complaints received by CIFO in 2021, 386 (93%) were from consumers. 16 (4%) were from microenterprises, with 2 (1%) from charities and 1 (0%) from trustees. The 10 (2%) other complaints were from entities that did not meet CIFO s definition of a micro-enterprise.

Table 4: Complaints Received - Sector of Business Activity

Jersey Guernsey UK & Rest of World Total

Banking 175 75% 18 12% 6 20% 199 48% Insurance 7 3% 101 66% 7 23% 115 28%

Pensions 14 6% 17 11% 6 20% 37 9% Investment/Funds 18 8% 11 7% 4 13% 33 8%

Non-Bank Money

6 3% 3 2% 2 7% 11 3% Services/Credit

Trust/Fiduciary 8 3% 2 1% 1 3% 11 3% Not Financial Services

5 2% 0 0% 4 13% 9 2% Related

Grand Total 233 100% 152 100% 30 100% 415 100% The columns in Tables 4, 5 and 6 show the location from where the financial services were provided.

Of the 415 complaints received by CIFO in 2021, 48% related to the banking sector. The relative proportions by location varied widely with Jersey having 89% of the banking sector complaints while Guernsey had only 7%. This contrasts significantly with the second most prevalent sector, insurance, which accounted for 28% of the overall total - but accounted for 66% of the complaints in Guernsey and only 3% in Jersey.

Of the other complaints, 9% related to the pensions sector, 8% to the investment/funds sector, 3% to the trust/fiduciary sector, and 3% to the non-bank money sector. The remaining 2% of complaints received by CIFO related to business activities that were not related to financial services.

The columns in Tables 4, 5 and 6 each show the location from where the financial services were provided.

Table 5: Complaints Received That Did Not Become Cases

Jersey Guernsey UK & Rest of World Total

Rejected as Out of

101 80% 61 86% 29 100% 191 84% Mandate

Withdrawn by

26 20% 10 14% 0 0% 36 16% Complainant

Grand Total 127 100% 71 100% 29 100% 227 100%

Of the 415 complaints received by CIFO in 2021, 227 complaints (55%) did not become case files reviewed by CIFO. Of those 227 complaints, 191 were rejected as falling outside of CIFO s statutory mandate. 36 were withdrawn by the complainant.

Table 6: Why Complaints Were Rejected As Out Of Mandate

Jersey Guernsey UK & Rest of World Total Premature 29 27% 12 18% 1 3% 42 20% Foreign Financial Service Provider

10 9% 9 13% 22 65% 41 20% (Non-Channel Islands)

Other 26 24% 4 6% 6 18% 36 17% Ineligible Complainant 15 14% 9 13% 0 0% 24 11%

Exempt Financial Service (Trust

10 9% 4 6% 1 3% 15 7% Company Business / Fiduciary)

Time (Start Date) 2 2% 11 16% 0 0% 13 6% Time (Too Old) 5 5% 7 10% 0 0% 12 6% Exempt Financial Service (Other) 5 5% 3 4% 4 12% 12 6% Delay in Referral to CIFO 4 4% 5 7% 0 0% 9 4%

Exempt Financial Service (Investment

2 2% 3 4% 0 0% 5 2% Fund)

Grand Total 108 100% 67 100% 34 100% 209 100%

*Please note some complaints may have been out of mandate for more than one reason

Of the 191 complaints that were rejected as falling outside CIFO s statutory mandate, 20% were premature complaints where the FSP had not yet been provided with an opportunity to resolve the complaint or where the complainant s loss had not yet crystallised to establish a fair basis for an award of compensation. 20% were rejected as they were about a non-Channel Islands financial services providers. 17% were rejected for a reason other than the primary statutory reasons for rejection under CIFO s law.

Table 7: Case Files Opened - Location of Financial Services Provider

Of the 269 case files (complaints Jersey 159 59% confirmed as falling within

CIFO s statutory mandate) Guernsey 109 41% opened in 2021, 160 (59%) were

about FSPs based in Jersey United Kingdom 1 0%

and 109 (41%) were about FSPs Total 269 100% based in Guernsey.*

Table 8: Case Files Opened - Location of Complainants

Of the 269 case files opened Jersey 50 19% in 2021, 50 (19%) were from

residents of Jersey, 23 (9%) were Guernsey 23 9%

from residents of Guernsey, and UK & Rest of World 196 73% 196 (73%) were from residents of

the UK or the rest of the world. Total 269 100%

Table 9: Case Files Opened - Sector of Business Activity

Jersey Guernsey Total

Banking 130 82% 15 14% 145 54% Insurance 6 4% 74 68% 80 30% Pensions 11 7% 13 12% 25 9% Investment/Funds 8 5% 4 4% 12 4% Non-Bank Money Services/Credit 4 3% 3 3% 7 3% Grand Total 159 100% 109 100% 269 100%

Over half of the 269 case files opened in 2021, 145 were related to the banking sector (54%). This proportion varied significantly between Jersey and Guernsey with banking comprising 81% of opened case files in Jersey but only 14% of opened case files in Guernsey. In contrast, the insurance sector accounted for 30% of all opened case files but represented over half (68%) of opened case files in Guernsey and only 4% in Jersey. The pensions sector accounted for 9% of opened case files with a similar proportion between the islands, 12 opened in Jersey and 13 opened in Guernsey.*

The columns in Tables 9, 10, 11, 12 and 13 each show the location from where the financial services were provided.

Table 10: Case Files Opened - Product Areas

Jersey Guernsey Total

Current Account 91 57% 9 8% 100 37% Other Insurance 2 1% 28 25% 30 11% Health Insurance 0 0% 22 20% 22 8% Home Insurance 1 0% 16 15% 17 6% Other Investments 14 8% 3 3% 17 6% Private Pension Product 0 0% 13 12% 14 5% Money Transfer 11 7% 1 0% 12 4% Employer Pension 10 6% 0 0% 10 4% Credit Card Account 6 4% 4 4% 10 4% Life Assurance Policy 2 1% 8 7% 10 4% Mortgage 5 3% 2 1% 7 3% Business Account 6 4% 0 0% 6 2% Consumer Loan 4 3% 2 1% 6 2% Financial Advice 2 1% 1 0% 3 1% Stocks and Shares 2 1% 0 0% 2 1% Automobile/vehicle Insurance 1 0% 0 0% 1 0% Safe Custody 1 0% 0 0% 1 0% Fixed Term Deposit Account 1 0% 0 0% 1 0% Grand Total 159 96% 109 97% 269 100%

Of the 269 case files opened in 2021, 100 (37%) related to current accounts and 30 (11%) related

to other insurance (mostly

home emergency insurance). Miscellaneous investments other than those already categorised made up 8% of the total case files opened.*

Table 11: Case Files Opened - Issue

Jersey Guernsey Total

Poor Administration or Delay 72 45% 33 30% 106 39% Non-payment of Claim 3 2% 40 37% 43 16% Fees/Charges 15 9% 18 16 33 12% Refusal of Service 22 14% 10 9% 32 12% Closure of Account 20 13% 2 1% 22 8% Disputed Payment Out 18 11% 0 0% 18 7% Mis-selling/Unsuitable Advice 5 3% 5 4% 10 4% Transaction 2 1% 1 0% 3 1% Enforcement/Collection 1 0% 0 0% 1 0% Interest Charged/Paid 1 0% 0 0% 1 0% Grand Total 159 98% 109 97% 269 100%

The most common issue in the 269 case files opened in 2021 was poor administration or delay with 106 (39%). Non-payment of insurance claim was the second most common issue with 43 (16%) and arose across insurance products. Fees/Charges was the third most common issue with 33 (12%).*

*CIFO opened a case file involving multiple FSPs from the Channel Islands and the UK. During the subsequent investigation, it became apparent that the appropriate respondent was the UK-based FSP only. The case file was therefore resolved as a second-stage out-of-mandate outcome and the complaint referred to the UK Financial Ombudsman Service (UK FOS).

Table 12: Resolved Case Files - How They Were Resolved

Jersey Guernsey Total

Mediated 163 76% 114 79% 277 77% Decided 52 24% 31 21% 83 23% Grand Total 215 100% 145 100% 360 100%

In 2021, CIFO opened 269 case files and resolved 360 through either mediation or an Ombudsman final determination. Of the 360 case files resolved, over three-quarters (77%) were resolved informally through mediated settlements. Only 83 (23%) of case files proceeded to the end of CIFO s process and required an Ombudsman final determination to resolve.

Alderney, Fort Tourgis, Alderney

Table 13: Resolved Case Files by Outcome

Jersey Guernsey Total

Case Files Resolved in Favour

of Complainant for More

85 40% 57 39% 142 39% Compensation than Previously

Offered by FSP

Case Files Resolved in Favour of

Complainant for Same or Less

17 8% 3 2% 20 6% Compensation than Previously

Offered by FSP

Case Files Resolved in Favour of

113 53% 85 59% 198 55% FSP

Total 215 100% 145 100% 360 100%

Case Files Resolved in Favour  Case Files Resolved in Favour  Case Files Resolved in

of Complainant for More  of Complainant for Same or  Favour of FSP Compensation than Previously  Less Compensation than

Offered by FSP Previously Offered by FSP

Of the 360 case files resolved in 2021, 142 case files (39%) were resolved in favour of the complainant for more compensation than previously offered by the financial services providers. A higher proportion (40%) of Jersey case files received higher compensation than previously offered by the financial services providers compared with 39% in Guernsey. An additional 20 case files (6%) were resolved in favour of the complainant, but for the same or less compensation than previously offered by the financial service provider. 198 case files (55%) were resolved in favour of the financial service provider.

Table 14: Amounts Of Compensation Awarded Up To Statutory Limit Of £150,000

Of the case files that were resolved in favour of the complainant and Maximum £104,351

involved financial compensation, the largest award for compensation Average £4,585 was £104,351. The average award of compensation was £4,585 with

the median amount £500. The lowest amount awarded was £20. Median £500

Minimum £20

PUBLICATION OF NEW SUMMARY COMPLAINTS STATISTICS

The published summary complaints statistics relate to the period between 1st January 2021 and 31st December 2021. Readers of the following summary complaints statistics should take care in drawing conclusions from the data. There are numerous factors that can influence the volume and nature of complaints made against a particular financial services provider (FSP).

These can include:

Some sub-sectors within the financial services industry will generate more complaints than others in relation to their number of total customers.

Some sub-sectors have more transactions (or customer interactions) per customer than others which can result in higher complaint volumes.

Some FSPs are larger and can have more customers which can result in more complaints even if the number of complaints as a proportion of its total customer base is lower than other comparable FSPs.

FSPs within the same sub-sector (e.g., retail banking) can have a different mix of products and services with some types of products and services being more likely to generate complaints than others (e.g., credit card accounts, current accounts with debit cards, savings accounts). It is also important to note that a higher volume of complaints does not necessarily have a negative connotation and may simply result from an FSP s more effective signposting of its customers with unresolved complaints to its internal complaint handling and to our office.

Stakeholders interested in exploring specific complaints-related data for the period 1st January 2018 and 31st December 2021 are encouraged to use CIFO s on-line search facility which can be found here.

Summary Complaints Statistics 2021

CIFO opened 415 complaints this year from 121 financial service providers (FSPs) and resolved 358* complaints against 70 FSPs through mediation or final decision.

This information shows in-mandate complaints resolved by CIFO within the 2021 calendar year. All complaints withdrawn, open or found to

be outside of CIFO s statutory mandate are not included. All FSPs are named using the legal entity that CIFO was advised of at the time CIFO received the complaint and provided to the FSP for confirmation.

* Due to post-period adjustments, the comparative data table may have a few minor differences from CIFO s overall 2021 statistical summary.

Weighbridge St Helier, Jersey

FIRM

FIRM

Confiance Limited Guernsey Pension 1 0(0%) 1(100%) 0(0%) 0(0%) 1(100%) CritManaeria Wgement Limitealth  ed Guernsey Investment/Funds 2 0(0%) 2(100%) 2(100%) 0(0%) 0(0%)

Dukes House Insurance

Guernsey Insurance 3 3(100%) 0(0%) 2(66%) 0(0%) 1(33%) Limited

Fairway Pension

Jersey Pension 2 0(0%) 2(100%) 0(0%) 0(0%) 2(100%) Trustees Limited

FirstRand Bank Limited,

Guernsey Banking 1 0(0%) 1(100%) 1(100%) 0(0%) 0(0%) Guernsey Branch

GBG Insurance Limited Guernsey Insurance 2 1(50%) 1(50%) 0(0%) 0(0%) 2(100%) General & Medical

Guernsey Insurance 5 4(80%) 1(20%) 1(20%) 0(0%) 4(80%) Insurance Limited

Generali WInsurance Co Lorldwide td* Guernsey *Multiple 15 10(67%) 5(33%) 2(13%) 0(0%) 12(87%)

Goldmoney Wealth  Non-Bank

Jersey Money Services/ 2 1(50%) 1(50%) 0(0%) 0(0%) 2(100%) Limited Credit

Gower Pensions

Guernsey Pension 2 1(50%) 1(50%) 0(0%) 0(0%) 2(100%) Management

Guernsey Home Loans  Non-Bank

Guernsey Money Services/ 1 1(100%) 0(0%) 1(100%) 0(0%) 0(0%) Limited Credit

Non-Bank

Hawk Lending Limited Jersey Money Services/ 1 0(0%) 1(100%) 0(0%) 0(0%) 1(100%)

Credit

HSBC Bank Plc,

Guernsey Banking 8 7(87%) 1(13%) 5(62%) 0(0%) 3(38%) Guernsey Branch

HSBC Bank Plc, Jersey

Jersey Banking 76 64 (84%) 12(16%) 42(55%) 6 (8%) 28(37%) Branch

Igloo Insurance PCC

Guernsey Insurance 2 2(100%) 0(0%) 2(100%) 0(0%) 0(0%) Limited

Insurance Corporation

Guernsey Insurance 4 3(75%) 1(25%) 2(50%) 0(0%) 2(50%) of the Channel Islands

Non-Bank

Jersey Home Loans Ltd Jersey Money Services/ 1 1(100%) 0(0%) 1(100%) 0(0%) 0(0%)

Credit

JTC Employer Solutions

Jersey Pension 2 1(50%) 1(50%) 0(0%) 0(0%) 2(100%) Limited

Lloyds Bank

Jersey Banking 16 10(62%) 6(38%) 6(38%) 1(6%) 9(56%) International Limited

FIRM

FIRM

Santander UK Plc,

Jersey Banking 2 2(100%) 0(0%) 0(0%) 0(0%) 2(100%) Jersey Branch

SG Kleinwort Hambros

Jersey Banking 1 1(100%) 0(0%) 0(0%) 0(0%) 1(100%) Bank (CI) Limited

Skipton International

Guernsey Banking 3 3(100%) 0(0%) 2(67%) 0(0%) 1(33%) Limited

Sovereign Trust

Guernsey Pension 5 3(60%) 2(40%) 1(20%) 0(0%) 4(80%) (Guernsey) Limited

SPF Private Clients

(Channel Islands)  Guernsey *Multiple 3 2(67%) 1(33%) 2(67%) 0(0%) 1(33%) Limited*

Standard Chartered

Jersey Banking 4 2(50%) 2(50%) 2(50%) 0(0%) 2(50%) Bank, Jersey Branch

The Islands' Insurance

Guernsey Insurance 4 3(75%) 1(25% 1(25% 0(0%) 3(75%) Brokers Limited

The Pensioneer Trustee

Company (Guernsey)  Guernsey Pension 1 0(0%) 1(100%) 0(0%) 0(0%) 1(100%) Ltd

Trafalgar Insurance

Guernsey Insurance 3 2(67%) 1(33%) 1(33%) 0(0%) 2(67%) Company Limited

Utmost WLimited* orldwide  Guernsey *Multiple 14 11(79%) 3(21%) 3(21%) 1(7%) 10(72%) WPlanning Jerseealth Financial y Ltd Jersey Investment/Funds 1 1(100%) 0(0%) 1(100%) 0(0%) 0(0%)

* FSPs with multiple sectors:

Alexander Forbes Channel Islands Limited - CIFO sectors: Investment/Funds and Pension

Barclays Wealth Management Jersey Limited - CIFO sectors: Investment/Funds and Banking

Generali Worldwide Insurance Co Ltd - CIFO sectors: Investment/Funds and Insurance

Overseas Trust and Pension Limited - CIFO sectors: Investment/Funds and Pension

RAW Capital Partners Limited - CIFO sectors: Investment/Funds and Non-Bank Money Services/Credit

SPF Private Clients (Channel Islands) Limited - CIFO sectors: Investment/Funds, Non-Bank Money Services/Credit and Insurance Utmost Worldwide Limited - CIFO sectors: Investment/Funds and Insurance

A N N E X E S

ANNEXES

TO THE ANNUAL

REPORT 2020

Channel Islands Financial Ombudsman

ANNEX 1 OUR STAFF

CIFO is committed to an inclusive and diverse workplace where we invest in our people. Appointment to the role of Principal Ombudsman

& Chief Executive and all new permanent staff appointments are made following an open recruitment process.

Our staff with a wide variety of experience and training in financial services, law, finance, law enforcement, consumer research and

policy, data protection, dispute resolution and regulatory compliance review and investigate unresolved complaints about the provision of financial services in or from the Channel Islands.

Douglas Melville

Principal Ombudsman & Chief Executive

Mike Ingram Ombudsman

Amanda Maycock Ombudsman

David Millington Ombudsman

Clare Mortimer Ombudsman

Ross Symes

Manager, Complaints Resolution

Chris Bick Case Handler

Natalie Mooney Case Handler

Lindsey Power Case Handler

Oana Lupu

Intake and Assessment Officer

Alison Finn

Manager, Finance & Administration

Carol Rabet Information Officer

Heather Rushton Administration Officer

Front row: Amanda Maycock, Chris Bick, Natalie Mooney, Mike Ingram, Alison Finn

Back row: Ross Symes, Oana Lupu, David Millington, Douglas Melville , Clare Mortimer, Lindsey Power, Heather Rushton, Carol Rabet

ANNEX 2

GOVERNANCE, ACCOUNTABILITY AND TRANSPARENCY

When combining an important public interest mandate with a strict need for independence, it is particularly important to demonstrate accountability and transparency. CIFO takes various steps to ensure that we are accountable for our performance of

this role and to drive our commitment to continuous improvement.

New CIFO directors

Several CIFO directors (including CIFO s chair) approached the end of their terms of office in 2021 and would be stepping down between January 2022 and January 2023 in accordance with governance good practice limiting directors to maximum collective terms of service not to exceed nine years. An open competition, overseen by the Jersey Appointments Commission (JAC), was held to identify director candidates for recommendation to the Jersey

Minister for Economic Development, Tourism

Sport & Culture and the Guernsey Committee for Economic Development for appointment. Upon conclusion of the search process, which attracted

a large number of excellent candidates from the Channel Islands, the United Kingdom, and Western Europe, two new directors were recommended to both governments and duly appointed effective 30 January 2022. Guernsey-based Robert Girard and UK-based Antony Townsend were appointed with a third recommendation of a Jersey-based candidate to be considered for appointment following the Jersey general election scheduled for June of 2022. The appointment of a new board chair (from amongst the appointed directors) to take office from the end of January 2023 will occur in late 2022.

CIFO rolling board review of CIFO operations

CIFO regularly conducts a rolling review of various aspects of CIFO s operations. At each quarterly CIFO board meeting, part of the strategy discussion time is devoted to conducting a review of CIFO s operation against one of the fundamental principles for effective financial ombudsman schemes set out by the International Network of Financial Services Ombudsman Schemes (INFO Network) and the

Service Standards Framework of the Ombudsman Association (OA). In the past, CIFO has been found by the board to be generally consistent with the fundamental principles and standards and those few opportunities for enhancement that were identified will be implemented by management as resources permit. These INFO Network fundamental principles can be seen here. The OA Service Standards Framework can be seen here.

Making such ongoing reviews a part of CIFO s governance culture ensures that we stay focused not only on the high-level purpose of CIFO s mandate, but also on the various operational aspects which are critical to ensuring our service is effective, responsive, and continuously improving.

Transparency of governance

CIFO remains committed to the continued transparency of our operation. The expenses of the chairman and directors as well as those of the Principal Ombudsman are posted to CIFO s website. Chairman and director remuneration and attendance record at board of directors meetings is provided in this annual report. Minutes of board of directors meetings are posted on CIFO s website.

Governance review

During 2021, CIFO s board of directors conducted

a governance review, including a director survey,

that looked at how the board functions, what the board focuses its attention on both at and between board meetings, and opportunities for continuous improvement in CIFO s governance and its interaction with and oversight of management. Arising from

the review, several tangible steps were undertaken including:

Reintroduction of a dedicated strategy discussion on the first day of our quarterly board of directors meetings followed by a working dinner enabling the morning of the second day to be dedicated to the usual quarterly board oversight matters. Introduction of a comprehensive induction and

ANNEX 2 (CONT.) GOVERNANCE, ACCOUNTABILITY AND TRANSPARENCY

orientation session for new directors (which

also serves as a refresher for existing directors) reflecting the fact that CIFO would be on-boarding its first new directors since its formation in 2015. Supplementing the risk-oriented quarterly rolling reviews of different aspects of CIFO s operations, formalisation of the board s risk management oversight to ensure the board has continuous oversight of on-going risks and mitigation measures in place and refreshes its perspective

on risks at least each quarter.

Board risk management

During 2021, CIFO s board of directors conducted in-depth reviews of different aspects of CIFO s operations including:

The integrity of CIFO s systems infrastructure and cybersecurity.

CIFO s accounting policy for case-related expenses in the context of CIFO s workload analysis.

Quality control measures in place for decisions made at various stages in CIFO s complaint resolution process.

Service complaints involving CIFO s performance of its role.

Possible legislative changes to CIFO s enabling legislation or other laws that impact CIFO s statutory mandate for recommendation to both governments.

In addition to these reviews, a comprehensive risk assessment methodology and dashboard were developed which provide a continual perspective for directors on the risks affecting CIFO rated for both inherent and residual risk, noting risk mitigation measures in place, and which is reviewed quarterly on an on-going basis. The risk categories reviewed include:

Operational risk Liquidity risk Conduct risk Outsourcing risk

Transparency of operations

In addition to the provision of this annual report

and audited financial statements, CIFO publishes a range of information on its website including board minutes, newsletters, and details of CIFO s funding and legislation. CIFO also publishes final Ombudsman decisions and case studies on its website. Published decisions on complaints referred to CIFO on or after

1 January 2018 will include the names of the FSPs involved. Complainants names are not published.

This year we have included a total of 25 case studies in this annual report that illustrate the range of complaints we deal with and the approach CIFO takes to achieving fair and reasonable outcomes in each unique circumstance.

CIFO is continuing its practice of publishing quarterly complaints statistics and annual summary complaint statistics on an FSP-named basis.

THE FIVE MEMBERS OF THE CIFO BOARD OF DIRECTORS ARE:

David Thomas (chairman) is a Senior Alternative-Dispute-Resolution Consultant for the World Bank and also a volunteer adviser for Citizens Advice (UK). He

was formerly: a lawyer in private practice and a member of the Council of

the Law Society (England and Wales); Banking Ombudsman (UK); principal ombudsman with the Financial Ombudsman Service (UK); and a director of the Legal Ombudsman (England and Wales). He has advised on financial consumer protection in more than 30 countries.

John Mills CBE (vice-chairman) was formerly a senior civil servant in the UK and Jersey. In recent years he has held a number of non-executive appointments in the public and statutory sectors, including as a board member of the Jersey Financial Services Commission, vice-chairman of the Port of London Authority and deputy chairman of Ports of Jersey Ltd. Since 2017 he has been Jersey s first Charity Commissioner. He is a member of the board of both public sector pension funds in Jersey and is also an independent trustee of one of the country s largest private sector pension schemes.

Rob Girard is a Fellow of the Chartered Institute of Bankers and has extensive banking experience with previous roles which include Country Head and Director of Institutional Banking for RBS International/NatWest in Guernsey and Board Director of the NatWest Group Global Captive Insurer. He acted as a committee member for the Association of Guernsey Banks for over 10 years. Rob is also a former member of the Juvenile Panel of Guernsey s Royal Court.

Deborah Guillou is a fellow of the Chartered Institute of Management Accountants and a Chartered Director with experience in wealth management, insurance, and fund management as well as utilities and healthcare. Debbie is currently Chief Executive Officer of Artemis Trustees Ltd in Guernsey and was formerly Chief Executive of the Medical Specialist Group. Previous roles include head of Generali International, chief financial officer of Generali Worldwide Insurance, a senior finance manager at Investec Asset Management, finance director at Guernsey Electricity and an accountant with Fairbairn International.

Antony Townsend currently serves as Chair of the Determinations Panel of the UK Pension Regulator (TPR) and Deputy Chair of the UK Professional Standards Authority for Health and Social Care. He brings deep experience in complaints handling and regulation. He previously served as the UK s Financial Regulators Complaints Commissioner, a Director of the Ombudsman Association, Chair of the UK and Ireland Regulatory Board of the Royal Institute of Chartered Surveyors, and Chair of the Regulation Board of the Association of Chartered Certified Accountants. Antony is also a former Chief Executive of the Solicitors Regulation Authority and General Dental Council in the UK. In the first part of his career, he was a policy civil servant in the UK Home Office working primarily on criminal justice issues.

DIRECTORS ATTENDANCE AT 2021 BOARD MEETINGS

ATTENDANCE AT BOARD MEETINGS

Regular in-person meetings of the board of directors were scheduled throughout 2021, although due to the Covid-19 pandemic restrictions, only one in-person meeting took place with the balance by video conference.

No. of  No. of  No. of  Attendance Meeting meetings meetings meetings rate dates

held attended absent

David Thomas (Chair) 4 4 0 100% 21 January 2021 Deborah Guillou 4 4 0 100% 29 April 2021 John Mills 4 4 0 100% 21 July 2021 John Curran 4 4 0 100% 20 October 2021

DIRECTOR REMUNERATION 2021

Total Pay Bonuses and other

incentives

David Thomas (Chair) £24,000 NIL Deborah Guillou £6,375 NIL John Mills £6,375 NIL John Curran £6,375 NIL

Catherine Best, Jersey

ANNEX 3 WHO WE ARE

The Channel Islands Financial Ombudsman (CIFO) is the independent dispute resolution service for unresolved complaints involving financial services provided in or from the Channel Islands of Jersey, Guernsey, Alderney, and Sark. Complaints can be brought by any individual consumers and small businesses from anywhere in the world, plus certain Channel Islands charities.

CIFO is a joint operation of two statutory ombudsman roles, established in law by the Financial Services Ombudsman (Jersey) Law 2014 and the Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014, jointly operating under the name Channel Islands Financial Ombudsman. CIFO operates from

a single office in Jersey with one set of staff and the

same board members overseeing the two statutory roles. The States of Jersey and States of Guernsey jointly appointed the Board of Directors and the Board appointed the Principal Ombudsman and Chief Executive. The office commenced operation on

16 November 2015.

The primary role of CIFO is to resolve complaints about financial services provided in or from the Channel Islands. It resolves complaints against financial

services providers independently, fairly, effectively, promptly, with minimum formality and so as to offer a more accessible alternative to court proceedings. This helps to underpin confidence in the finance sectors of Jersey and Guernsey, both locally and internationally.

OUR MANDATE

The mandate of the Channel Islands Financial

Ombudsman is set in the primary laws and supporting secondary legislation in Jersey and the Bailiwick of Guernsey. CIFO can only investigate complaints that meet certain conditions relating to

the person bringing the complaint, the type of financial service complained about and the timing limitations. The table on the following page summarises the mandate according to the location from where the financial services were provided. Please note that this is a summary, and the full detail is provided in the legislation viewable on our website.

Guernsey Coastline

A SUMMARY OF

HOW WE DETERMINE IF A COMPLAINT IS WITHIN CIFO S MANDATE

Were the financial services provided in or

CIFO will not be able from Jersey, Guernsey, Alderney or Sark? NO review the complaint

YES

Are the financial services provided within  NO CIFO will not be able

CIFO s mandate? review the complaint

YES

Are the timing conditions satisfied? NO CIFO will not be able

review the complaint

YES

Is the complainant eligible? NO CIFO will not be able review the complaint

YES

CIFO will proceed with its review of the complaint

North Coast of Jersey

ANNEX 4

HOW WE WORK

The complex role of an Ombudsman

When we receive a complaint, CIFO s

team looks at the information provided

to make sure it falls within our mandate

(see our Summary of how we determine if

a complaint is within CIFO s mandate on page 48). For instance, the FSP has to fall within CIFO s mandate as set out by law in both Jersey and Guernsey. A summary of CIFO s mandate is set out on page 47. We do not handle matters that have already been through a court or an arbitration. We look for a final answer from the FSP to the consumer responding to their complaint, which allows us to start our review knowing the positions of both parties.

During an investigation, we gather information from both parties and review the facts of the case. We make decisions based on what s fair to both the consumer and the FSP, the law, regulatory policies and guidance, any applicable professional body, standards, codes of practice, or

codes of conduct, taking into account general principles of good financial services and business practices. If we believe

that the facts of the case do not warrant further review, we will let the consumer know. We always make sure that we explain our reasons, just as we do when

we are determining that compensation is appropriate.

If we determine that compensation is owed to the consumer, we try to resolve the dispute through a facilitated settlement between the consumer and FSP that aims to address the complaint quickly with a fair outcome to both parties.

If we are unable to facilitate a settlement but we continue to believe the consumer should be compensated, we will complete our investigation and make a decision. Our decision, if accepted by the consumer, becomes binding upon the FSP. Guidance as to CIFO s Process Stages & Timelines is detailed on page 51.

Neither a court nor a regulator, CIFO does not fine or discipline FSPs or individuals working within the financial sector. However, we can require that FSPs pay compensation to the consumer of up to £150,000 to cover economic loss, distress, or inconvenience.

In some instances, non-financial actions such as correcting a credit reporting agency record may be appropriate. CIFO s approach to compensation has been published on

our website and can be seen here. If a

client does not accept our conclusions,

they are free to pursue their case through other processes including the legal system, subject to statutory limitation periods.

49

A preference for mediation, where appropriate

Where appropriate, CIFO seeks to resolve complaints through early mediation. Mediation is an alternative dispute resolution method where a neutral and impartial third party, the mediator, facilitates dialogue in a structured multi-stage

process to help parties reach a conclusive and mutually satisfactory agreement. A mediator assists the parties in identifying and articulating their own interests, priorities, needs and wishes to each other. The ombudsman process is often more of a mediation where the ombudsman plays the role of the guide, mediator, and arbitrator to both parties in a dispute.

As an independent third party with relevant sector knowledge, CIFO can help the parties see sense and come to a mutually agreed and fair solution. Mediation is

not always an appropriate solution for complaints, as there may be significant

and material disputes of fact, or the parties may be too deeply entrenched in their

own views. Where necessary, both parties

to the complaint have a right to a binding decision from a CIFO Ombudsman, but in most cases that does not prove necessary. All CIFO s case handlers have advanced training in mediation skills and endeavour to resolve complaints through this alternative approach which tends to be faster and

better at preserving the existing relationship between the customer and their financial services provider.

Sark Harbour, Guernsey

THE CIFO PROCESS STAGES & TIMELINES

Intake is where a complaint is brought to CIFO with a completed complaint form, logged into CIFO s complaint management system (CMS), and acknowledged back to the complainant. We strive to complete this stage within 4 days.

Assessment is where the complaint is assessed against CIFO s mandate which is set by law. We determine whether CIFO can review the complaint or whether it should be rejected under our law. We inform both parties by email (or by post if required) with our decision. If we are proceeding with a review, we request the file information from the financial services provider. We strive to complete this stage within 7 days.

This is where the financial service provider s response to  the complaint and their complaint file is prepared, sent, and  received by CIFO pursuant to our request issued at the end  of stage 1. At this stage, a complaint becomes a CIFO case  file for our review. We expect the financial service provider to  respond with their file within 14 days.

Allocation is where a case file is ready for assignment to a member of our team for review. Given the volume of case files being handled by our office, there can be a delay at this stage until a case handler has capacity to take on a case file. We strive to complete this stage and assign new case files within 30 days.

Review is where the assigned CIFO team member reviews the case file and reaches a conclusion through either a successful mediated settlement based on their assessment of the complaint or a recommendation to the complainant and their financial service provider. In some cases where one or both parties disagree with the recommendation, we will proceed to an Ombudsman Decision. We strive to complete this stage and issue the case handler s recommendation within 60 days.

This is where the Ombudsman reviews the case file and  decides what, if anything, the financial service provider  should do to resolve the complaint. In some cases, a  provisional decision will be made giving both parties an  opportunity to review the Ombudsman s conclusions and  providing an opportunity for additional input from both  parties. A final decision on the complaint, if accepted by  the complainant, becomes binding on the financial service  provider. We strive to complete this stage and conclude our  work on each case file within 60 days.

ANNEX 5

CASE STUDIES

The case studies presented in this report and published on CIFO s website are intended to illustrate the type of complaints handled and the approach taken to resolve them. The case studies are based on actual CIFO case files. Some specific details may be altered to protect confidentiality.

BANKING, INVESTMENTS/ FUNDS  

INVESTOR INCURS LOSS DUE TO EARLY SURRENDER

This complaint relates to a bank s investment advice, the complainant s withdrawal from the investment, and the subsequent surrender charges the complainant incurred as a result.

In December 2019, Mrs A wanted to invest some savings and visited her bank who completed a financial planning report for her. Mrs A s financial planning report profile concluded that she wished to remain invested for 10 years or more, with a moderate level of investment risk. Mrs A was advised by her bank to carefully read all the information they had provided.

The bank recommended a single diversified investment product for Mrs A to invest in which the bank anticipated would pay interest of 3% per annum. Mrs A agreed and invested £75,000 from her savings accordingly.

Less than a year later, Mrs A visited the bank to check on the value of the investment she had made and was told the value of her investment had dropped due to market turmoil arising from the Covid-19 outbreak. Mrs A decided to withdraw her funds and incurred

a cost of approximately £6,000 for surrendering

the investment only 10 months into a 10-year fixed investment plan.

Fees and charges

Process and procedures Investment risk

Hard sell

Mrs A made a complaint to the bank as she felt that the Covid-19 outbreak was prevalent in the news

at the time she invested, and the bank should have advised caution against investing at such a time. Mrs A also felt that as she was only offered one product, the bank had used hard sell tactics to coerce her into investing in that specific option.

The bank advised they had provided a suitable investment based on the information provided

by Mrs A and that all the relevant paperwork had been completed and signed. The documentation included a confirmation that Mrs A was aware of the risks associated with the product that the bank had recommended. Therefore, the bank did not uphold the complaint and referred Mrs A to CIFO.

CIFO investigated and noted that Mrs A had signed a declaration confirming that she was happy to remain invested for 10 years and was fully aware that the investment may not make the return

that was anticipated. CIFO also decided that the bank s process for recommending one suitable diversified investment product was reasonable under the circumstances and that the bank should not be responsible for the loss incurred with Mrs A s investment. CIFO concluded that nobody could have reasonably foreseen at that time the effects Covid-19 would have on the financial markets and Mrs A made the choice to invest at that time. CIFO did not uphold the complaint.

MORTGAGE VALUATION FEE NOT REFUNDED WHEN MORTGAGE APPLICATION WAS NOT ACCEPTED

A bank refused to refund a property valuation fee when the complainant s buy-to-let mortgage application was declined.

In November 2020, Mrs E submitted a mortgage application to her bank for the purchase of a new property. The bank formally approved the buy-to-let mortgage, subject to a valuation and rental income confirmation. The bank instructed Jersey Residential Valuation Services (JRVS) who instructed a valuer from the bank s panel of valuers, to complete the valuation and rental income confirmation for the property at a cost to the applicant borrower of £400.

Mrs E signed a mortgage declaration, stating that payment of the valuation fee would be made, regardless of whether the mortgage completes

(i.e., the mortgage application was accepted). The bank had also told Mrs E that the only valuation they were able to accept was a bank instructed valuation and not a customer s own-obtained valuation. The valuation and rental income confirmation were returned but confirmed the buy-to-let property Mrs E wished to purchase would not yield the rental income required to cover the mortgage. The bank therefore rejected Mrs E s mortgage application.

Valuation fee

Process and procedures Mortgage application

Mrs E complained to the bank and requested a refund of the £400 valuation and rental income confirmation fee. The bank said that they were unable to approve the mortgage following the outcome of the valuation as they were advised by the valuer that the rental income would not meet the requirements of the requested mortgage. This meant that the

bank s affordability policy for a loan of this size (net disposable income) would not be met. The bank confirmed to Mrs E that they were unable to refund the valuation cost as they had formally approved the mortgage application based on different information received from Mrs E.

Mrs E took her complaint to CIFO saying that she was not given an opportunity to obtain a second valuation and requested the valuation fee of £400 be refunded, plus interest on that fee, along with compensation for the inconvenience caused in the form of a grocery store voucher valued at £100.

CIFO investigated and found that the bank had followed their process and procedures correctly. CIFO also noted that Mrs E had understood the terms of the agreement by signing a declaration that the fee would need to be paid irrespective of whether the mortgage was completed. The bank had also sent an email re-iterating that the formal mortgage approval was subject to the valuation and rental income confirmation. Finding no error on the part of the bank, CIFO did not uphold Mrs E s complaint.

Case Study #3   BANKING  T heBmaneks transfer delay

BANK CAUSES STRESS DUE    Process and procedures

 Distress and inconvenience award TO DELAYS IN FINALISING A

PROPERTY TRANSACTION

A customer claimed his bank failed to complete a funds transfer on time to pay for a house purchase, causing the complainant needless distress.

In September 2020, Mr C told his bank to transfer funds from his account in the Channel Islands to a UK account for the purchase of a property. Mr C had sought advice from his bank prior to the transfer to ensure the property purchase would not be delayed by the funds transfer. The bank had assured Mr C that the transfer would be completed on time.

Unfortunately, Mr C s funds did not arrive at the UK account on the date previously advised by the bank. Mr C contacted his bank to find out why the transfer had been delayed. Mr C s bank responded by saying the transaction had actually been cancelled and offered no apparent reason for this cancellation. Mr C had no alternative but to request the bank to do another funds transfer, postponing the house purchase transaction by another few days. This further delay caused Mr C some embarrassment as he had to request additional time from the seller to finalise the property purchase.

The funds were transferred, and the house purchase transaction was completed. Mr C made a complaint to his bank about the delay. The bank responded with an apology, but Mr C was not satisfied with the bank s response and referred his complaint to CIFO.

CIFO investigated and noted that the bank admitted the delay in completing the transaction was the bank s responsibility caused by a staff error. CIFO therefore upheld the complaint and recommended the bank pay compensation to Mr C for the distress and inconvenience caused. CIFO also noted that

the bank had not contacted Mr C to advise him that there had been an error with the transaction. It was only when Mr C contacted the bank to inquire about the delay that the error was discovered. Mr C then initiated the second funds transfer request.

Upon learning of CIFO s conclusion on the matter,

the bank initially offered £150 for the upset it had caused Mr C. However, CIFO proceeded to make a recommendation to both parties as CIFO concluded the bank s offer was not fair and reasonable under

the circumstances. Although CIFO recognised Mr C had suffered no economic loss, as the property seller had accommodated the delay caused by the bank, CIFO did feel the assurances given, the error, and the bank s lack of communication with Mr C regarding the error had together caused significant distress that warranted greater compensation that what the bank had offered. CIFO therefore recommended the bank provide Mr C with an increased offer of £500 due to the distress caused by the multiple errors. The bank accepted and compensated Mr C accordingly.

BANK ACCOUNT INCURS CHARGES WITH A DELAYED TRANSFER REVERSAL REQUEST

A customer incurred charges when a bank delayed returning funds to her account.

In August 2020, Miss Q transferred funds from her overseas account to her local bank account. Within a few hours on the same day, Miss Q asked her overseas bank to reverse the transfer.

Her transfer reversal request was received a week later by her overseas bank, meaning that Miss Q had to make a formal transfer reversal request to her local bank in order for them to complete the transfer. After receipt of Miss Q s transfer reversal request the local bank tried to contact Miss Q on several occasions to finalise the transaction but was unable to reach her to confirm the instructions. Miss Q s overseas bank made another two requests to her local bank to reverse the funds, but the local bank advised they were still awaiting confirmation from Miss Q to complete the reversal transaction to return the funds back to Miss Q s overseas bank account.

In September 2020, Miss Q finally contacted her local bank to authorise the return of her funds. Her local bank advised her that she would be liable for the loss incurred due to foreign exchange rate differences arising between her local and overseas banks. Miss

Q complained to her local bank as she felt that the foreign exchange fees were only being charged because her transaction reversal request had not been concluded when she had instructed, and that

Payment reversal request Foreign exchange fees

Delayed process

this had not been her fault. The local bank rejected Miss Q s complaint and referred her to CIFO.

Miss Q complained to CIFO that she had requested an immediate transfer reversal, but the local bank had delayed this request ultimately causing Miss Q to incur foreign exchange charges. Miss Q also stated that the local bank s claim to have attempted to contact her was untrue and it had taken months for the return of her funds to be completed.

CIFO investigated and concluded that the delays

with completing the transfer reversal request were mostly due to the local bank s inability to contact Miss Q. The local bank had made several calls to Miss Q and sent an email, but Miss Q had not responded to her bank s attempts to contact her. CIFO listened to the recorded calls made by the local bank, reviewed the email they had sent and determined that the local bank had indeed attempted to contact Miss Q as stated. However, CIFO noted that after Miss Q had authorised the payment back to her overseas account, the local bank took a further seven days to complete that transaction. Therefore, CIFO partially upheld the complaint and recommended the local bank compensate Miss Q £1,381 for the loss due to the exchange in rates for the further unreasonable delay caused by her local bank once the transaction was finally authorised.

BANKING   T heEmureos denominated debit card BANK USES COMMERCIAL Commercial or business decision

DECISION TO DENY PAYMENTS Poor communication

TO PARTICULAR MERCHANT

A customer complained about their inability to make online debit payments to an online European store using a Euro denominated debit card.

Mr Z contacted his primary bank (the one he uses most for his personal transactions) after an online European store payment was declined when he used his Euro denominated debit card. Mr Z s bank initially advised that this was due to an issue with his debit card, then later advised that their policy prevented customers from making online payments to that particular online European store. Mr Z felt that his bank was being untruthful, as he was able to make payments to the same online European store from another bank which was part of the same banking group as his primary bank. Mr Z complained to his bank who referred his complaint to CIFO.

Mr Z complained to CIFO that the bank had provided incorrect advice regarding his debit card and had not provided an adequate explanation as to why online transactions with that particular online European store was blocked by the bank. With Mr

Z s permission, CIFO suspended its investigation while Mr Z s bank made a further attempt to resolve his complaint. Mr Z s bank apologised for the poor standard of communication, reiterated that it was bank policy that prevented the payment and offered Mr Z 200 to cover communication costs and for the distress and inconvenience he had experienced. Mr Z declined their offer and referred the matter back to CIFO for review.

CIFO investigated further and found that the complaint related to the bank s commercial or business decision and their risk management policies. CIFO was therefore unable to review the matter. CIFO informed Mr Z that banks often introduce payments- related risk management policies due to intelligence received or after completing an internal risk review, and that bank was not obligated to advise as to why they made these commercial decisions. Mr Z did not accept CIFO s conclusion and added that he believed his bank s policy existed in order to unreasonably restrict CIFO s powers to intervene.

CIFO again re-iterated that it was unable to interfere with a bank s commercial or business decision to block card purchases for certain merchants if they had concerns regarding those merchants. CIFO decided that it was reasonable that the bank imposes restrictions in accordance with its risk management decisions and its processes and policies. Therefore, CIFO did not uphold Mr Z s complaint. CIFO did however, conclude that it would be fair and reasonable under the circumstances for the bank to compensate Mr Z for the distress and inconvenience caused him by the bank s poor communication in this matter.

BANK ACCOUNT CLOSURE DUE TO REGULATORY REQUIREMENT LEADS TO COMPLAINT

This complaint related to the closure of a complainant s joint bank account, the proceeds from an investment portfolio that had been paid into the bank account and an existing complaint.

In 2015, Mr & Mrs D transferred an investment portfolio away from their bank. This was because of a complaint they had made about the bank in 2010

to the local regulatory authority which they believed was still ongoing. In January 2016, the bank received a final payment from one of Mr & Mrs D s portfolios that had gone into liquidation, and this was credited to their bank account which they still held with the bank because of the ongoing complaint issue.

In November 2020, the bank wrote to Mr & Mrs D advising closure of their account, but Mr & Mrs D objected to the closure and the bank later started to apply a monthly charge to their joint account. Later, the bank advised they could no longer maintain the account due to regulatory issues and again advised that the account would soon be closed. Mr & Mrs

D took their complaint to CIFO as they believed the closure of the bank account would sever the link

to their earlier unresolved complaint and that the bank had failed to deal with the proceeds of the liquidated portfolio in accordance with their previous instructions.

Account closure

CIFO s statutory time limit Commercial judgement

CIFO investigated and advised Mr & Mrs D that CIFO could not review the earlier complaint as the event had occurred more than 6 years prior to bringing their complaint to CIFO and therefore fell outside of CIFO s statutory mandate. CIFO also explained to Mr & Mrs D that CIFO will not generally review complaints if they concern the legitimate exercise of a financial service provider s commercial judgement, which includes decisions to terminate a relationship with a customer. This is in line with CIFO s policy on factors that CIFO considers in rejecting complaints. As commercial entities, banks are entitled to choose who they do business with and may terminate relationships with customers at their discretion and in accordance with the terms and conditions. CIFO would normally expect appropriate advance notice be given before the account closure. CIFO concluded that the bank s actions regarding the final portfolio payment were not unreasonable and noted that the bank had provided adequate notice to Mr & Mrs D of the account closure. CIFO did not uphold the complaint.

BANKING T heAmcceosunt closure COMPLAINANT S FUNDS Know Your Customer documentation

Joint account

DRAINED FROM JOINT BANK Time limit to refer complaint ACCOUNT BY EX-PARTNER

This complaint related to the withdrawal of all the funds from a complainant s joint bank account by the ex-partner who still had full account access.

Miss A held a joint bank account with her ex-

partner that had approximately £52,000. The bank had advised Miss A that the account could not be used until all outstanding Know Your Customer documentation had been received. This was part of the bank s regulatory obligation to enable the

bank to continue to provide account facilities. This led Miss A to believe the bank account could not be accessed by either herself or her ex-partner until

the documentation had been provided. However, in November 2017 Miss A s ex-partner transferred all the funds out of the account without Miss A s knowledge.

In December 2020, Miss A complained to the bank as she believed that neither she nor her ex-partner could have accessed the account in November of 2017. The bank advised that it was not aware of a dispute between Miss A and her ex-partner and that the joint bank account could accept withdrawals from either Miss A or her ex-partner as they both had signing authority on the account. The bank accepted that, had it been aware of any dispute, it would have been appropriate to change the mandate so that both account holders consent would be needed before money from the account could be released.

The bank also explained that, although there were restrictions on the account (because Know Your Customer documentation was missing), it could ease those restrictions in certain circumstances.

In July 2021, Miss A referred her complaint to CIFO. CIFO considered whether the complaint could

be reviewed as the time between the bank s final response to her complaint and Miss A s complaint

to CIFO had been longer than 6 months. CIFO can generally only review complaints that have been received within 6 months of the financial service provider s final decision. However, CIFO made an exception given the specific circumstances in this case and reviewed Miss A s complaint.

CIFO found that Miss A and her partner were in the process of dividing their assets (including a house) and it would have been entirely reasonable for that agreement to include the funds from the joint bank account. That meant that Miss A could well have been entitled to recover the missing funds from her ex-partner. However, CIFO noted that Miss A s bank was not aware of the dispute between Miss A and

her ex-partner and, as both had equal access to withdraw funds from the joint account, it was not fair or reasonable to expect the bank to reimburse Miss A for her loss. CIFO did not uphold this complaint as the bank had made no error.

VISHING ATTACK ON COMPLAINANT LEADS TO LOSS OF FUNDS

A customer lost their funds from a joint account with their spouse after authorising online payments to a fraudster who was inciting fear by pretending that the customer s bank accounts were under threat from criminals.

In January 2021, Mrs Y received a vishing phone call from a fraudster claiming that her funds were in jeopardy from criminals who had accessed her joint accounts. The fraudster told Mrs Y to make various payments throughout the day to move, and thereby safeguard her money. The fraudster instructed Mrs Y not to contact anyone or use her mobile phone during the interaction, which lasted most of the day. Mrs Y, who was in a state of shock and fear, was first instructed by the fraudster to make a payment of £20,000 to a bank account in the UK which Mrs Y s bank intercepted. Mrs Y s bank contacted Mrs Y as they believed it to be fraudulent, but Mrs Y was told by the fraudster to tell the bank that the payment was genuine. Having received her assurance, the bank then proceeded with the transaction as instructed.

The fraudster continued to terrorise Mrs Y on the phone by warning her that the criminals were still

in her joint accounts. The fraudster then instructed Mrs Y to make another online payment of £25,000 to a different UK bank account, and that transaction went through. Later that afternoon, Mrs Y was again instructed by the fraudster to authorise two more transactions, each for £25,000. Both payments were intercepted by the bank and neither went through.

When Mrs Y s husband was alerted later that day, he tried to contact the bank but could not get a response. When Mr Y finally reached the bank, they assured him that the first transaction of £20,000 was still being held for fraud checks. However, the bank had in fact already completed this transaction, along with the second transaction of £25,000 - meaning that £45,000 had been transferred to the fraudsters.

Authorised push payment fraud Vishing

Safe account

The bank was able to recover approximately £17,000 of that amount, leaving Mr & Mrs Y with a loss of approximately £28,000. Mr & Mrs Y complained to the bank asking to be reimbursed, but the bank declined

to do so. The bank did however agree that they had provided incorrect information to Mr Y on the phone and offered a distress and inconvenience payment of £300. Mr & Mrs Y rejected that offer and brought their complaint to CIFO.

CIFO investigated and noted that the first transaction had been stopped because the beneficiary s bank account in the UK was on a UK banks watch list

which the Channel Islands bank had access to. CIFO also noted, from the bank s recording of the first transaction call, that the fraudster s voice

could be heard at the very end, instructing Mrs Y to hang up. CIFO felt that the bank should have noted that and been put on notice of potential fraud as it could reasonably have been feared that Mrs Y was potentially acting under duress, partly from hearing the fraudster s voice on the call but also more generally from the content of the call and the answers Mrs Y gave to the bank s questions. This was even more concerning as the bank had intercepted the first attempted payment because of concerns about the beneficiary account. Had the bank recognised these signs and made more enquiries (possibly including contacting Mr Y who was also a joint account holder) before releasing the first payment, CIFO concluded

on balance that the fraud would have been uncovered and no additional payments would have been made.

CIFO upheld the complaint and recommended that the bank compensate Mr & Mrs Y for the amount which had not been recovered from the beneficiary banks, plus interest at an annual rate of 8% simple, plus a distress and inconvenience award of £500 in total, about £30,000.

INSURANCE

INSURANCE COMPANY REJECTS CLAIM DUE TO TERMS AND CONDITIONS AFTER VERBALLY CONFIRMING THE CLAIM COVER

A customer complained about their insurance company s rejection of a claim when it said the wife s treatment was not covered by their policy.

Mr B and his wife were visiting a maternity doctor who noted it was a high-risk pregnancy and recommended Mrs B undergo some additional tests. Before Mr B agreed to the additional tests, he contacted his insurance company by telephone to ensure that the tests would be 100% covered by his health insurance policy. Mr B s insurance company confirmed that everything would be covered, and they followed the doctor s advice to obtain the additional tests.

Mr B then received bills for the tests as the insurance company had rejected the claim. Mr B contacted his insurance company who advised that the medical provider that provided the tests was not in its network of providers so the claim wouldn t be paid in full. Mr

B referred the insurance company to the recorded telephone call that he had with the insurer prior to him and his wife agreeing the recommended tests. The insurance company referred Mr B to his health insurance policy and said the terms and conditions were clear. The insurance company advised that the terms and conditions of the policy could not be modified by either oral miscommunications or misunderstandings and could only be altered through a formal process. The insurance company referred Mr B to CIFO.

Mr B brought his complaint to CIFO emphasising that the whole process had been mentally stressful. Mr B believed that, as the insurance company had confirmed on a recorded telephone call that 100% of the costs for

Recorded customer call determinative

evidence

Insurance policy terms and conditions Distress and inconvenience

the tests would be covered, the insurance company should honour the claim.

CIFO investigated and decided that the telephone call between the insurance company and Mr B had led Mr B to continue with the recommended tests believing that the costs would be fully covered. Mr B had explained to the insurer that he and his wife could not afford the cost of the tests, so would not have been able to proceed

with the tests unless they were covered under the policy. Mr B had also explained during the call that he was an expatriate and inexperienced with making claims in the country he was residing in. Mr B s comments during the call also should have indicated to the insurer that the medical provider may not have been within the insurer s network. The insurer s adviser had explained the tests would be covered in full and had not explained this was dependent on the medical provider being within the insurer s network. CIFO therefore upheld the complaint and recommended that the full health insurance claim

of £3,700 be paid. CIFO also decided that as this process had caused Mr B great anxiety during a particularly stressful period, the insurance company should also compensate Mr B a further £300 for the distress and inconvenience caused.

CIFO recommended the insurance company to cover the full cost as it was decided that it was clear Mr B wouldn t have gone ahead with the treatment in this way if not

for the incorrect advice received from the insurance company.

Case Study #10 INSURANCE  T heCmlaeims rejection

INSURANCE CLAIM    Security requirements

REJECTED DUE TO NON-   Cinussutroemd ears os betligation to properly protect the COMPLIANCE WITH SECURITY  Bicycle insurance policy

REQUIREMENTS   Insurance broker as agent of insurer

A customer objected to the rejection of a bicycle theft insurance claim. The claim was rejected due to the limitations in the insurer s policy about keeping the insured asset secure.

In April 2020, Mr M discovered that his bike had been stolen. Mr M had stored the bike in a council-supplied, shared, residents only, secure bike hanger which

he rented. Mr M submitted a claim to his insurance company for the value of the bicycle and the damaged accessories, estimated to be worth £750.

The insurer rejected the claim citing that the bike was stolen from a place that did not meet the insurance policy s security requirements for the insured location . The insurer also stated that, as the bike was left for more than 12 hours outside the insured location, according to the policy the bike would be considered abandoned .

Mr M appealed the rejection of the insurance claim stating that the policy did not clearly state that

a bicycle theft from a council-supplied bicycle hangar would not be covered, but Mr M did notice that provision would be granted to bicycles stored in a communal outbuilding . However, the insurer continued to reject the claim as they stated a

 residents only, council supplied bicycle hangar did not comply with the specific policy phrase communal outbuilding within the boundaries of the property .

In May 2020, the insurer responded and explained

that although the bicycle hangar was on Mr M s road

it was not the insured location defined in his policy (which was his home address). As the bicycle was

not at the insured location for more than 12 hours, it was considered abandoned, and Mr M s appeal was rejected. The insurer referred Mr M to CIFO, and Mr M brought his complaint to our office.

CIFO investigated and concluded that the definition of abandonment was quite different to the commonly accepted definition of the word and that policy exclusions regarding the bicycle storage significantly limited the scenarios in which cover would be granted. CIFO explained that both the regulator s code of conduct for the jurisdiction in which the policy was sold and the Licensed Insurer s (Conduct of Business) Rules, 2018 require significant and unusual terms

to be highlighted and explained to customers at the point of sale.

The policy documentation made clear that the insurance broker was acting as the insurer s agent when selling the policy. This meant that the insurer was responsible for any acts or omissions made by the insurance broker when selling the policy. CIFO concluded that it was unreasonable for the insurance company to rely on the unclear policy exclusions to decline the claim. CIFO recommended the insurance company settle the claim in line with the remining terms of the policy and pay interest of 8% on that settlement, from the date of loss until the date of the final settlement.

INSURANCE

HEALTH INSURANCE CLAIM REJECTED AS COVID PANDEMIC NOT COVERED

An insured objected to a health insurance claim rejection for a Covid-19 diagnosis as the insurance provider advised that pandemics were not covered by the complainant s insurance policy.

In March 2020, Mrs G contracted Covid-19 and was admitted to hospital on an emergency basis with the costs covered by local public healthcare. In April 2020, Mrs G made a health insurance claim for the period

of time that she was in hospital, as her policy allowed for a hospital cash benefit if Mrs G was admitted

to hospital under public healthcare as opposed to private healthcare. Mrs G s claim was rejected by her insurance provider.

Mrs G complained to her insurance provider who advised that the claim was rejected as they did not pay for treatment arising from any disease or illness which was considered to be a pandemic and the World Health Organisation had declared Covid-19 to be a pandemic prior to Mrs G s admission to hospital. The insurance company did offer to reduce Mrs G s monthly premiums by a third for a period of three months, but Mrs G declined the offer and advised

that she would not be renewing her health insurance policy. The insurance provider s final response letter to Mrs G referred her to the UK Financial Ombudsman Service (UK FOS) if she remained dissatisfied. Mrs G made a complaint to UK FOS, but they were not able to consider her complaint as it did not fall within their jurisdiction. UK FOS referred Mrs G to CIFO.

Claim rejection

Covid-19

Terms and conditions

Incorrect financial ombudsman referral

Mrs G complained to CIFO claiming that her insurance provider should have made their terms and conditions clearer in respect of Covid-19 and that they had referred her to the wrong financial ombudsman, causing her a great deal of inconvenience and wasted time.

CIFO investigated and noted that Mrs G s health insurance policy s terms and conditions did exclude costs for the treatment of a disease or illness considered to be an epidemic or pandemic. The health insurance policy s terms and conditions also stated that an emergency admission to hospital would only be covered if the treatment itself was eligible under the terms of cover. Since the pandemic was not covered, the emergency hospital admission would also have been excluded. On this basis CIFO concluded that the insurance company s decision to reject Mrs G s health insurance claim was reasonable and in accordance with the insurance policy s terms and conditions.

CIFO did though note that Mrs G was directed to refer her complaint to the wrong financial ombudsman which significantly delayed her complaint being considered. CIFO therefore recommended the insurance company pay £150 to Mrs G for the inconvenience she suffered as a result.

INSURANCE T heHmomese insurance HOME INSURANCE Accredited engineer

Second professional opinion CLAIM REJECTED DUE TO

ENGINEER S MIS-DIAGNOSIS

OF PROBLEM

A home emergency insurance claim was rejected because the home insurance company s appointed engineer mis-diagnosed an error, leading to the belief that the issue was not covered by the complainant s home insurance policy.

Mr D s boiler failed leaving him with no hot water. Mr D contacted his home insurance company, and an engineer was dispatched to examine the boiler. The engineer advised that the boiler s heat exchanger was blocked, and this was unfortunately outside of Mr D s home insurance policy cover. The engineer also recommended additional work that would be needed at a cost of between £500 - £1,000. As the additional work was not covered by Mr D s home insurance policy, the engineer was unable to complete the repairs and left.

Mr D was not convinced with the first engineer s diagnosis and contacted another accredited engineer to re-examine his boiler. Mr D s engineer found that the issue was related to a seized pump that was covered by Mr D s home insurance policy and not a blockage as the first engineer had concluded. Mr D contacted his home insurer again to advise of this new advice, but the home insurer stated that the seizure must have been caused by the blockage and rejected Mr D s home insurance claim. Mr D felt he had no alternative but to commission his engineer to complete the work at a cost of approximately £600 as he had no hot water. Whilst Mr D s engineer completed the work, he advised Mr D that there was no blockage and that the additional work required according to the first engineer, costing between £500 and £1,000, was not necessary.

Mr D made a formal complaint to his home insurance company as he believed the actual boiler issue was covered by his home insurance policy. Consequently, Mr D requested his home insurance company refund him the cost of the repairs. Mr D s home insurance company investigated and upheld Mr D s complaint. They apologised to Mr D but stated that Mr D s repair costs where unreasonable and offered Mr D approximately £450 towards the repairs with no compensation for distress or inconvenience. Mr D accepted this offer and took his complaint to CIFO in an effort to retrieve the rest of the repair costs and compensation.

Mr D complained to CIFO, requesting a refund of the outstanding £150 repair costs and £50 for the distress and inconvenience he had suffered. CIFO investigated and found that Mr D s home insurance company s engineer had originally mis-diagnosed the problem which had led to Mr D s complaint. CIFO also noted that Mr D s home insurance policy did cover the actual boiler issue. Therefore, notwithstanding the previous agreement for the amount offered by the insurer, CIFO upheld the complaint and recommended Mr D s home insurance company cover the remaining costs for the boiler repairs and compensate Mr D £100 for the distress and inconvenience they had caused. The recommendation was accepted by the insurer.

INSURANCE T heTmraevsel insurance COMPLAINANT S  RDeeplaaytriation REPATRIATION DELAY LEADS Communication error

TO FURTHER MEDICAL

TREATMENT

Miss X was a keen marathon runner and led an active lifestyle. In February 2019, Miss X was on a ski trip in Europe when another skier crashed into her, causing a hip fracture. Miss X was admitted to the local hospital. The doctors confirmed she had an un-displaced

hip fracture which they pinned. Miss X was told an operation was needed. Miss X contacted her travel insurance provider for help getting back home. Miss X s travel insurance provider informed Miss X that the overseas hospital could complete the procedure there, but Miss X was reluctant and reiterated her wish to return home to have the operation in her

local hospital. The travel insurer engaged a third-

party provider to arrange for Miss X s repatriation. Meanwhile, the hospital near her home was contacted and was ready for Miss X s admission upon her arrival.

It was not until one week later that the third-party provider had managed to arrange for a flight medic to meet with Miss X to assist with her return home. In the meantime, Miss X had kept going to the local hospital in Europe for pain treatment while awaiting her transportation home.

The flight medic suggested repatriation using a stretcher but was told this could take several more days to organise. Miss X insisted on making the journey immediately and the doctor prescribed a strong pain reliever to support her through the return journey.

Miss X travelled back to her home via a commercial flight, using three seats. While on the plane, she was forced by flight safety regulations to put her legs down and therefore experienced great discomfort. When the first flight landed, she took a connecting flight to get to her home and upon arrival was taken home. She then went to her local hospital. By this time, the hip fracture had displaced, and Miss X needed a full hip replacement. The hip replacement operation took place shortly after.

Miss X complained to her travel insurance provider regarding the delays she had experienced during her repatriation, which she felt had caused her further injury. Her travel insurance provider suggested compensation of £15,000 would be appropriate under the circumstances; however, the travel insurance provider only offered her £7,500 and told her to claim the other £7,500 from the doctor who first treated her in Europe following the accident. Miss X rejected their offer, and her complaint was referred to CIFO.

Miss X s travel insurance provider stated that the overseas doctor had recommended a procedure, but not a full hip replacement and that it was Miss X s decision to travel home without a stretcher so the procedure could be completed locally. Miss X s travel insurance provider also informed CIFO that the delays in Miss X s repatriation where due to the fact that Miss X s local hospital near her home had advised that an operation could not be done locally. However, Miss

X s local hospital confirmed to CIFO that they had provided confirmation the day after the ski accident that they were able to perform the operation, and that if appropriate travel could have been arranged sooner the fracture would not have displaced, meaning the full hip replacement would not have been required.

CIFO upheld the complaint on the basis that any subsequent issues were caused by the travel insurer s unreasonable delay in getting Miss X back home. CIFO initially recommended total compensation of £35,000 given the medical result, the impact on Miss X s active lifestyle, and the severe level of distress and inconvenience caused. Miss X s travel insurance provider disagreed with some of CIFO s conclusions and argued that the failure had been in some part, due to the overseas doctor and asked CIFO to reconsider. CIFO obtained external advice regarding the amount of compensation awarded by the courts in such cases and recommended compensation should be paid to Miss X to the value of £25,000 plus 8% interest from February 2019, the date of the complaint, for a total amount of approximately £30,000.

PENSION TRUST INCURS LEGAL FEES THAT COMPLAINANT BELIEVED WERE NOT RELEVANT OR NECESSARY

A complainant believed that the trustees of his pension acted wrongly by seeking legal advice and charging the fees for that advice back to his pension.

Mr H held a pension in the form of a retirement annuity trust with a local trust company. The trustees and Mr H s pension trust both held an interest in a separate company, of which the majority shareholder was Mr H s trust. In August 2018, Mr H on behalf of the separate company wrote to the trustees as shareholders, following which the trustees sought legal advice and billed Mr H s pension trust for legal fees of about £7,000.

Mr H complained to the trust company, seeking a refund of the legal fees plus interest. In response, the trustees said that the advice they had sought had covered a wide range of issues including the closure of Mr H s pension scheme; in other words, it was not just limited to the content of the company letter. The trustees maintained that not only was it appropriate for them to have sought legal advice, but it was right that the fees should have been billed to his pension.

Pensions

Retirement annuity trust Trustee s duties

Legal fees

CIFO investigated and noted the trustee s duties

and responsibilities were not only to act in the

best interests of the beneficiaries, to preserve and enhance the value of the trust but also to take advice where appropriate . This included seeking legal advice in appropriate circumstances. CIFO reviewed the company letter which Mr H had sent to his trustees, along with the legal advice the trustees obtained. Because the trustees were unable to provide a copy of any written instructions they had provided to the advocates (it had been covered orally in a meeting) CIFO had to use a balance of probabilities test to establish what had most likely happened. Overall, CIFO concluded that in these specific circumstances it had been reasonable for the trustees to seek the legal advice they did, and it was similarly reasonable that Mr H s pension should meet the legal costs incurred by the trustees. CIFO did not uphold Mr H s complaint.

Case Study #15 PENSION

PENSION PROVIDER S REFUSAL TO TRANSFER PENSION WITHOUT INDEMNITY

A pension plan beneficiary complained when his pension plan provider failed to action his request to transfer his personal pension plan. His pension plan provider required an indemnity from the receiving plan trustee before completing the requested transfer.

Mr N held a membership in a qualifying recognised overseas pension scheme (QROPS) and wanted to transfer this personal pension to a UK based self- invested personal pension (SIPP) provider. Mr N discussed the transfer with his financial adviser and found a suitable pension scheme to transfer into. In order for the requested transfer to take place, Mr N s existing pension provider requested the new pension provider to first complete a letter of understanding and an indemnity.

Unfortunately, both pension providers were unable to agree upon the wording of the indemnity and

the pension plan transfer was not actioned. Mr N complained to his existing pension provider as he believed their requirement for the indemnity was unreasonable and unfairly restricted Mr N s ability

to transfer his private pension plan to whichever provider he wanted. Mr N s pension provider rejected his complaint and referred him to CIFO.

Themes

 Qualifying recognised overseas pension plan (QROPS)  Self-invested personal pension (SIPP)

 Pension transfer

 Indemnity

 Role of ombudsman where commercial dispute

between FSPs affecting customer

 Complaint rejected using ombudsman discretion

under the law

CIFO investigated and concluded that it was inappropriate for CIFO to impose a commercial agreement on the two pension providers, each understandably seeking to contractually limit their potential liabilities arising from Mr N s requested pension plan transfer. Mr N s financial adviser requested assistance from CIFO to convene a meeting between the two pension providers to assist with mediating a solution. CIFO saw such a requested mediation between commercial parties as inconsistent with its statutory role as ombudsman. CIFO suggested that there were other organisations that could provide a mediation or arbitration service to assist the trustees to find a solution to their impasse.

CIFO concluded that Mr N s complaint was out of mandate on the basis that the complaint was about the exercise of the respondent pension provider s commercial judgement to manage risk and that the issue to be resolved was between the two pension plan providers. CIFO explained to Mr N that CIFO s law sets out that a complaint can be rejected if the subject matter of the complaint is inappropriate, such as where the complaint is about the legitimate exercise of the respondent s commercial judgement . On that basis, the ombudsman exercised his discretion under the law to reject the complaint.

PENSION PROVIDER S REFUSAL TO TRANSFER PENSION DUE TO INAPPROPRIATE FINANCIAL ADVICE

A beneficiary of a pension plan complained that his pension trustee refused his request to transfer his pension plan to another provider.

Mr X was a member of a qualifying recognised overseas pension scheme ( QROPS ) and he wanted to transfer his pension plan to a UK-based pension provider that had been recommended by his independent financial adviser.

Mr X asked his existing pension provider to forward the relevant transfer documentation to his financial adviser. Mr X s financial adviser received the documentation and contacted the new pension provider. The existing pension provider then heard from Mr X s financial adviser that the new pension provider had asked for further information. The existing pension provider provided the requested information, but it pointed out that the scheme

did not meet the new pension provider s transfer requirements, so the proposed transfer did not take place.

Pension transfer

Independent financial adviser

Pension scheme transfer fee

Qualifying recognised overseas pension

scheme (QROPS)

Mr X complained to his existing pension provider, who replied saying the requested pension plan transfer would not be in his best interests. Mr X disagreed and complained to CIFO saying that it was his pension scheme and therefore his decision whether to transfer his pension plan. He also said his existing pension provider s fees had increased drastically.

CIFO looked at the plan fees and the additional

fees quoted for the pension plan transfer. Mr X had previously been notified of the pension scheme transfer fee increase and CIFO decided this disclosure had been fair and reasonable. CIFO spoke with Mr X and his existing pension provider, and it was revealed that the existing pension provider s problem was with the quality and integrity of the advice provided by Mr X s financial adviser, not the pension plan transfer itself. After these conversations, Mr X engaged a new independent financial adviser and a new pension plan transfer was completed to meet Mr X s wishes

COMPLAINANT S INABILITY TO ACCESS HIS ONLINE PENSION PLAN TRADING PLATFORM

This complaint arises from a complainant s inability to gain access to his online pension plan trading platform for three months.

Mr O held a pension in the form of a trust which

was administered by trustees for an annual fee. He appointed himself as the investment manager, making investments for the trust using the online trading platform. Between March and May 2019, Mr O was unable to access the online trading platform. He asked the trustees to compensate him for the time he spent pursuing the matter and for the consequent effects of being unable to make trades for his pension account.

The trustees explained that the original platform had been decommissioned in March 2019. Whilst the new platform was supposed to have been available from February 2019 so ensuring a seamless transition problems meant it was out of action for three months. The trustees further explained that the problems

arose because of their intermediary s due diligence process and the need for another intermediary s technical support in other words, what happened was not the trustees fault. They added that while the platform was out of action, Mr O could have traded by other means and they also noted that he only traded very occasionally, so he may not have needed to make a trade at all during the three-month period the online platform was not functioning. The trustees offered

a fee refund for the three-month period but did not otherwise uphold Mr O s complaint.

Trustees responsibilities; change in process Online pension plan trading platform

CIFO s action in bringing the parties back

together to settle the complaint between themselves

Mr O rejected the trustees offer, firstly saying that he should not in any event have been charged a platform fee when it was not available so the refund meant nothing . He further felt that the trustees were not taking responsibility for their failure, and he again requested compensation. After the trustees rejected Mr O s appeal, he referred his complaint to CIFO.

When CIFO started to investigate Mr O s complaint the trustees told us they had recently paid him more compensation by way of a 12-month fee holiday, and they regarded the complaint as settled. But Mr O explained that this additional compensation had been for a separate complaint about a different matter. His original complaint about the online trading platform remained outstanding.

As CIFO continued to investigate the complaint it became increasingly clear there was a fundamental misunderstanding between the trustees and Mr O which given the nature and value of the underlying relationship to them both might be most effectively resolved by them talking to each other. Both acknowledged that they had not, in fact, done so. At CIFO s suggestion they agreed to a call, whereafter Mr O accepted that the trustees had indeed intended the additional compensation previously paid to cover both of his complaints. Both Mr O and trustees expressed their gratitude to CIFO for the practical approach we had adopted bringing them back together and helping to cement their continuing business relationship.

CHANGE IN TRUSTEES AND SUSPENSION OF INVESTMENTS IN PENSION TRUST

A pension plan beneficiary complained about a pension trust that invested in funds which lost value and a change of trustee that occurred prior to that investment loss.

Mr S was advised to invest £111,000 of his pension plan assets into a fund. Two years later the trustee of the pension plan changed. The following year the fund that Mr S s pension plan had invested in was suspended. The suspension meant that the fund was split into two separate and still suspended funds. The investment value fell drastically due to the fund suspension and Mr S could no longer access the invested money or receive the level of pension income that had been originally anticipated.

Mr S brought a wide-ranging complaint to the new trustee. He felt that the pension plan assets had

been sold without his authority. He also felt that

the trustee should have told him that his pension plan investments were in difficulty and that the risk rating of his investments had changed. Mr S also felt the trustee should have notified him of a conflict of interest during the setup and management of his pension plan, additional fees and charges, the new trustee s role, and that the original trustee had made changes to his application form without authorisation or communicating the changes. Mr S also complained that the new trustee had given him incorrect information when he wanted to get the money from his pension plan investment.

The new trustee did not uphold Mr S s complaint, but it agreed that the information it gave Mr S about encashing his pension investment could have left him confused. The trustee waived the outstanding fees and reduced the pension plan termination fee. Mr S did not accept this as sufficient compensation and brought his complaint to CIFO.

Suspension of assets

Change of trustee

Trustee responsibilities

CIFO investigated and found that the sale of the pension plan assets pre-dated the absolute date bar in CIFO s statutory mandate. CIFO could therefore not investigate that part of Mr S s complaint. On the complaint about the failure by the trustee to notify

Mr S of the pension investment s difficulties or a change in risk rating, CIFO found that the trustee had no stated requirement to proactively provide this information to Mr S and therefore the trustee could not reasonably be held accountable for this part of the complaint. CIFO concluded that the alleged conflicts of interest during the setup and maintenance of Mr S s fund did not relate to the new trustee as they played no part in the establishment of the initial pension

plan investments. CIFO noted that the part of Mr S s complaint regarding fees and charges pre-dated CIFO s statutory mandate and CIFO again, could not investigate this part of the complaint. CIFO concluded that role of the trustee should have been advised to Mr S at the time the pension plan structure was initially established by the previous trustee, and

not when the new trustee was appointed. Mr S had also complained that his application form had been altered, however, in the absence of sufficient evidence CIFO could not establish if this form had been altered by the previous trustee or the new trustee.

Finally, in relation to the encashment of the investments, CIFO decided that the trustee had already made fair and reasonable compensation. CIFO did not uphold this complaint.

INVESTMENT/FUNDS

FINANCIAL PLANNER BREACHED CUSTOMER S PRIVACY RELEASING PERSONAL DATA

The privacy of a complainant s personal data was breached by his financial planner causing distress.

In January 2021, Mr W received an email from his financial planner with a pension proposal document, which included personal financial and health information. The sender also included another customer s email address in error, causing a data breach. The other customer noticed the error and immediately contacted the financial planner to advise that he had deleted the email without reading the contents. Mr W remained unaware of the breach.

In May 2021, Mr W was reviewing his financial affairs and noticed the pension proposal email included an additional email address. Mr W also noticed that the email he was sent had tried to be recalled by his financial planner. Mr W queried this with his financial planner who advised that the email recall request was made because changes needed to be made to the pension proposal. Mr W decided to contact the other customer who had been emailed in error and he advised that he had deleted the email immediately, without reading the contents and contacted the financial planner. Mr W complained to his financial planner, alleging that they had attempted to cover up the error and that he had suffered sleepless nights as a result leading to numerous doctor appointments to help with the stress.

Data breach

Attempted cover-up

Delayed process

Distress and inconvenience award

Mr W s financial planner notified the local data protection authorities a few days after Mr W s complaint and advised the local financial regulator

that it had received a complaint regarding a data breach. Mr W received an apology from his financial planner regarding the breach of his data, but they

did not accept Mr W s assertion that they had tried to cover up the error. The financial planner referred Mr W to CIFO.

CIFO investigated and found that the financial planner did know at the time Mr W s data had been breached because of the communication from the other customer who had been copied into the email. CIFO decided that the financial planner should have known what course of action to take when a data breach occurred. CIFO also noted that the financial planner had not been transparent in January 2021 when Mr W queried the incident, which further compounded the error.

CIFO upheld the complaint and concluded that

Mr W had suffered undue stress as a result of the error made by his financial planner and suggested compensation of £500 for distress caused. Mr W rejected this proposal and provided CIFO with a letter from his doctor that detailed the level of stress he had suffered as a result of the incident. CIFO reconsidered the compensation value and issued a final ombudsman decision confirming that the initial recommended compensation of £500 was a fair and reasonable amount considering the circumstances of this case.

INVESTMENT/FUNDS

DELAYED REPAYMENT OF COMPLAINANTS INVESTMENT

This complaint related to delays in the complainants receiving repayment of their investments from an investment bank, and a claim for a pro-rata dividend following repayment.

Mr & Mrs B held two investments with an investment bank. In late 2020, the investment bank wrote to all investors proposing that the fund be closed, and all investments repaid. The proposal was accepted,

the fund was closed, and in December 2020 the investment bank tried to repay Mr & Mrs B their money. It did so by using the payment instructions it held on file for them one payment by cheque, and the other (larger) investment by bank transfer. The cheque payment went through, but the bank transfer was rejected by the receiving bank. The investment bank subsequently issued a further cheque to repay the remaining investment amount.

After Mr & Mrs B received their money back, they made a complaint because they believed that to avoid delays the investment bank should have checked with them how they wanted their investment repaid. They felt they had been caused considerable inconvenience when trying to resolve the rejection of the bank transfer. Mrs & Mrs B also complained that they had expected to receive a pro-rata dividend on their investments in January 2021, because their money had been invested in the fund for most of

the last quarterly dividend period. They believed

the closure proposal had not been clear enough

Process and procedure

Inadequate communication

Entitlement to pro-rata dividend

about this and that, if they had understood they weren t going to get a final pro-rata dividend, they wouldn t have voted in favour of the proposal. But the investment bank rejected their complaint and referred them to CIFO.

After Mr & Mrs B complained to CIFO, the investment bank offered them £500 as compensation for inconvenience caused. Mr and Mrs B initially accepted that offer, but then changed their minds. They continued to pursue the complaint with CIFO, requesting considerably more compensation even though the investment bank had by then already paid them the £500 that had been offered and accepted.

CIFO investigated and found that, before the investment bank had repaid Mr and Mrs B s money, it had asked them to check and if necessary, update

the repayment instructions it held for them. Because they did not do so, CIFO didn t believe the bank had acted wrongly when it used the payment details it had to try to repay Mr and Mrs B s money. CIFO also noted that Mr & Mrs B had received the full value of their investments in accordance with the accepted terms with the closure proposition and did not accept that any further pro-rata dividend was due.

CIFO concluded that the £500 payment the bank had already made fairly reflected any inconvenience Mr & Mrs B had experienced.

INVESTMENT/FUNDS

UNSUITABLE FINANCIAL ADVICE LEADS TO COMPLAINANTS TAX LIABILITIES

An investor received unsuitable investment advice which led to excessive tax implications when investment withdrawals were later made.

Mrs G requested investment advice from an investment firm and, based on that advice, invested £175,000 into a bond. The bond was a non-qualifying investment for UK tax purposes which meant any withdrawals from the initial investment would potentially be considered taxable by the UK tax authorities.

Mrs G had requested that the investment adviser recommend an investment that she could make withdrawals from without incurring a sizable

tax liability, essentially a short-to-medium term investment. However, the investment adviser had recommended a medium-to-long term investment which only permitted 5% of the investment amount to be withdrawn free of tax.

When Mrs G discovered that such withdrawals were potentially taxable, she complained to her investment adviser. The investment adviser stated

Tax liability

Non-qualifying for UK tax purposes Investment advice

that they did not provide tax advice and felt that Mrs G had discussed her tax position regarding the recommended investment with her accountant and referred Mrs G to CIFO. Mrs G complained to CIFO and requested a lump sum of £25,000 to cover her potential tax liabilities on her future investment withdrawals.

CIFO investigated and noted that the investment adviser was required to make proper suitability enquiries before providing investment advice to Mrs G and, in this case, CIFO concluded that the investment advice led to Mrs G investing in an investment that was unsuitable for her. CIFO also decided that Mrs

G s investment adviser had failed to explore Mrs G s personal circumstances as Mrs G had clearly intended to make withdrawals from the bond beyond the 5% allowed as regular non-taxable payments.

CIFO upheld the complaint and recommended that the investment adviser compensate Mrs G for either the tax liability for that financial year upon Mrs G s surrender of the investment or on a portion of the original investment sum if Mrs G wished to retain the investment.

NON-BANK MONEY

Terms and conditions MORTGAGE REJECTED DUE TO

PROPERTY VALUATION BUT

FEES STILL APPLY

This complaint related to a complainant s mortgage application and the lender s fees to support the initial application stages.

Miss Z approached a lender through a mortgage broker to obtain funding for a property purchase.

The lender requested a mortgage arrangement fee of £2,000 and a valuation fee of approximately £700 to support the application. Miss Z agreed to the fees. The property valuation received by the lender showed the value of the property was significantly lower than the purchase price that Miss Z had originally advised. Upon receipt of the valuation, Miss Z decided not to proceed with the property purchase.

Miss Z then complained to the lender that the application fees paid should be refunded as her mortgage application did not progress. Miss Z also complained that she believed the lender s valuer had negligently completed the property valuation. The lender stated that the fees were non-refundable as they represented the work, they had carried out in connection with the initial stages of the mortgage application. However, the lender did offer to transfer

the arrangement fee to a new mortgage application and refund the procurement fee portion (33%) of the mortgage arrangement fee to Miss Z. Miss Z refused their offer, and the lender referred her complaint to CIFO.

Miss Z complained to CIFO that the reason the mortgage did not complete was due to the extremely low valuation and requested that both lender fees be refunded. CIFO investigated and noted that Miss Z had accepted and signed the mortgage application s terms and conditions which stated that both fees were non-refundable. CIFO also noted that the valuation completed by a qualified independent firm appointed by the lender was prepared in accordance with the relevant regulatory standards. CIFO

advised Miss Z that if she felt the valuer had been professionally negligent, she would need to address this with the relevant authority responsible for setting the standards for property valuers.

CIFO did not uphold this complaint and advised Miss Z that the lender s previous offer was fair and reasonable. Miss Z accepted CIFO s recommendation.

NON-BANK MONEY SERVICE/CREDIT

MORTGAGE PROVIDER REJECTS PORT REQUEST CAUSING COMPLAINANT UNNECESSARY FEES AND DISTRESS

This complaint related to the refusal of a mortgage provider to port an existing mortgage, resulting in additional costs for the complainant to arrange an alternative loan.

In May 2020, Mr G asked his mortgage provider if he could repay part of his existing mortgage and then resume it on the same terms secured against a different property, known as porting , because they had sold their existing property and wished

to purchase a smaller property. Mr G wanted to repay £250,000 of his mortgage but was told by his mortgage provider that this was not possible as the new loan term would be less than five years, the minimum term for a mortgage that the mortgage provider offered.

However, Mr G s mortgage had been taken out in July 2005 for a period of 20 years. This meant that the new loan term should have been just over 5 years, above the stated minimum period required by his mortgage provider. As such, Mr G made a complaint to his mortgage provider who said that Mr G s request did not meet their criteria at the time of his inquiry and rejected his complaint.

Porting

Terms and conditions Arrangement fee

Mr G therefore arranged a mortgage with an alternative mortgage provider. Mr G felt that his previous mortgage provider should be liable to cover the new mortgage provider s arrangement fee of £2,000, along with the additional interest for the five- year period totalling £36,000. Mr G s original mortgage provider again rejected Mr G s appeal and referred Mr G to CIFO.

CIFO investigated and found that Mr G s original mortgage provider s terms and conditions did allow for porting. The terms and conditions also stated that, although the mortgage provider had stopped making new mortgages available in Mr G s jurisdiction, any existing mortgages may be ported for a new property of a lower loan amount. With this information CIFO concluded that Mr G s terms and conditions entitled Mr G to port his mortgage. However, CIFO noted that Mr G met with difficulties when the property he wished to purchase was withdrawn from sale even though Mr G had already arranged a new mortgage from an alternative mortgage provider.

CIFO considered that the withdrawal from sale

of the property Mr G wished to purchase was not the fault of the mortgage provider. Compensation for potential additional interest over the five-year period was therefore not appropriate. CIFO partially upheld the complaint, recommending that Mr G s original mortgage provider cover the new mortgage provider s arrangement fee of £2,000 along with an additional £500 as compensation for the distress and inconvenience caused.

NON-BANK MONEY  Themes SERVICE/CREDIT  LPoroacneasms oa rntdis partoiocne sd cu hreedule

Inadequate communication COMPLAINANTS REPAYMENT

CONFUSION DUE TO UNCLEAR

LOAN SETTLEMENT

A borrower became confused about their loan repayments due to the loan company s inadequate explanation of the applicable loan repayment charges.

In July 2019, Mr F approached a loan company to borrow money. Mr F said he was planning to pay

off the loan early so he asked the loan company to explain to him how this would work for his loan. Mr F requested the loan company to provide him with a copy of the interest calculations or a loan amortisation schedule to demonstrate what he would need to pay

if repaying the loan early. The loan company said it could not provide this but did advise Mr F that he would be charged a 6.25% flat rate of interest on the loan amount and, if Mr F made an early repayment, he would only be liable for the interest up to the months the loan ran for, along with a closure fee. Mr F agreed to take the loan and signed the loan agreement.

Mr F repaid the loan early, but he was unhappy with the amount he was required to pay. He said that the loan settlement information he was provided declared his original loan amount to be much higher than what he borrowed which meant more interest had been charged than should have been. Mr F complained to his loan company.

The loan company advised Mr F that their loan calculation was applied on an actuarial basis, which incorporated both the loan value and interest. Mr F complained that he was not provided with enough information at the outset, and he felt that the loan company had treated him unfairly. When Mr F requested a loan amortisation schedule, the loan company dismissed this request as it was not part of their process. The loan company said the interest rate had been applied correctly and that Mr F had received an interest rebate when repaying the loan early. Mr F was not satisfied with the loan company s response and referred his complaint to CIFO.

CIFO requested the loan company provide a full breakdown of the loan settlement calculation. This demonstrated that the interest and charges applied to the loan were correct. CIFO pointed out that the loan company was a signatory to Jersey s Code of Practice for Consumer Lending. Signatories to the code agree to provide and explain key information to customers including how interest is applied and, if the total amount of interest charged is changed, how and why. CIFO concluded the loan company had not provided this information when Mr F requested it.

CIFO mediated Mr F s complaint and recommended the loan company compensate Mr F £100 for the distress and inconvenience caused when the loan company failed to provide a clear breakdown of

the loan settlement when requested. Both parties accepted.

NON-BANK MONEY SERVICE/CREDIT

COMPLAINANT S LOANS WRITTEN OFF AS

LOAN COMPANY LENT INAPPROPRIATELY

A borrower was unable to make the agreed repayments on his loans after the loan company lent him more money.

Mr F took out a £45,000 loan from a loan company but, after a while, he struggled to make the repayments. In November 2018, he asked to borrow more money from the same loan company for his business. This was declined because the loan company wanted to see the previous loan run properly for at least six months before agreeing to any further lending.

In April 2019, and although Mr F was still in arrears on his existing loan, he asked the loan company for

a further £35,000, again to help his business. This time, the loan company agreed and also consolidated all of Mr F s existing borrowing into one new loan. Unfortunately, Mr F fell into arrears on the new loan almost immediately. Mr F then complained to the loan company claiming they had not made enough checks or done enough due diligence before lending him the extra money. In response, the loan company said it had agreed to the new loan on the basis of comprehensive income and expenditure and profit and loss statements. They also said they believed that Mr F was extremely knowledgeable in his business and that the extra money would help him earn a great deal more which would enable him to repay all of his debts.

Loan agreement

Affordability checks

Inadequate process and procedures

When he complained to CIFO, Mr F said that the extra lending, combined with a string of bad luck he had experienced both personally and, in his business,

had caused him to lose everything. Mr F wanted the loan company to write-off all of his outstanding debt, compensate him for his lost earnings, and give him compensation for business and reputational damages along with a substantial distress and inconvenience award. Mr F estimated his total claim was worth more than £300,000.

Whilst CIFO found that Mr F s loan company had completed adequate checks before it had granted him the first loan, the same could not be said for the second loan. Although the lender was not bound by any local consumer credit law, CIFO concluded that when assessing the complaint, it was appropriate to have regard to a local voluntary code of practice for consumer lending which the loan company had signed up to in an adjoining jurisdiction. This code of practice promotes responsible lending and commits lenders to obtain the right information to ensure that credit is not advanced where the ability to repay might be in doubt.

CIFO concluded that the loan company had not made enough checks or undertaken enough due diligence before it had agreed to Mr F s second loan. Therefore, CIFO upheld the complaint and recommended

that the loan company rework Mr F s loan as if the second loan had not been granted and write-off the difference which came to approximately £46,000. Both the loan company and Mr F accepted CIFO s recommendation.

ANNEX 6

INSIGHT INTO OUR APPROACH UNDERSTANDING CIFO S GENERAL APPROACH TO COMPENSATION

If a customer has been affected by an error, there may be different types of compensation to consider. This information is to help stakeholders understand the general approach taken by CIFO in determining fair and reasonable compensation for complaints relating to losses.

When a complaint referred to CIFO is found to have merit, our objective is to restore the customer to the position they would have been in if things had not gone wrong. For investment complaints, that can mean awarding money for example, compensation for financial loss due to unsuitable advice or refunding a fee that was charged incorrectly. But we may

also direct financial services providers (FSPs) to

do something that does not involve money such as correcting information or issuing a written apology.

In some cases, we will award compensation for non-financial loss for example, for the distress and inconvenience an issue has caused a customer.

It is important to note that an ombudsman s decision does not set a precedent. This is because each case is decided in accordance with what is fair and reasonable in those specific case circumstances. While it is acknowledged that similar products and services are seen across different cases, the number of variables present (such as different complainants, firms, factual backgrounds and outcomes) means it would be unreasonable to bind future decisions to the individual circumstances of previous ones.

TYPES OF COMPENSATION WE CAN AWARD

The Financial Services Ombudsman (Jersey) Law 2014 and the Financial Services Ombudsman (Bailiwick

of Guernsey) Law, 2014 both empower CIFO to make decisions requiring an FSP to pay compensation or directing an FSP to do something. These can include:

Money awards

Awards for distress and inconvenience Interest awards

Costs awards

Directions

MONEY AWARDS

When a customer has lost out financially, we usually tell the FSP to compensate them for the loss it caused. This can be any amount of money up to our award limit of £150,000 set by law.

Where it is clear how much a customer lost, we will specify the amount of money the FSP needs to pay.

Where it is not clear we will usually set out the basis on which the FSP should compensate a customer, rather than a specific amount. For example, if a customer was unaware that their mortgage payment had been calculated incorrectly, we might ask the FSP to calculate how much they would have owed if the error had not occurred.

In cases where we think a customer is due more

than our statutory award limit of £150,000, we will recommend the additional amount we think the FSP should pay. While CIFO can only make a binding award of compensation up to £150,000, the recommended compensation above £150,000 reflects the total amount of compensation that we believe would be fair and reasonable in the circumstances. Once they understand the basis of CIFO s conclusion, some FSPs decide to pay the full amount.

AWARDS FOR TROUBLE, UPSET, DISTRESS OR INCONVENIENCE

A mistake can affect a customer practically or emotionally, as well as financially. So CIFO can also award fair compensation for any of the following subject to the overall £150,000 compensation limit:

Distress Inconvenience

Pain and suffering Damage to reputation

We might award these if we feel a customer faced obstacles or difficulties that could have been avoided if the FSP had handled things differently.

INSIGHT INTO OUR APPROACH UNDERSTANDING CIFO S GENERAL APPROACH TO COMPENSATION

EXAMPLES OF AWARDS FOR DISTRESS AND INCONVENIENCE

In considering compensation for distress and inconvenience, CIFO has taken note of, and will generally seek to be consistent with the approach taken and compensation ranges used by the

Financial Ombudsman Service in the United Kingdom (UK FOS). The ranges of compensation are as follows:

Moderate (less than £500) Substantial (£500 to £2,000) Severe (£2,000 to £5,000) Extreme (£5,000 or more)

Awards for moderate distress and inconvenience will generally be associated with errors which cause any one or more of:

A short delay

Brief upset

Mild concern

Minor inconvenience

In considering whether awards for distress and inconvenience in individual complaints should be for an amount falling within the higher ranges noted above, CIFO will generally take into account such aggravating factors as:

Whether the error was a single incident or

a recurring sequence of similar or different incidences.

The degree of frustration or unnecessary delay caused to the customer.

The degree of unnecessary and/or ongoing stress and disruption caused to the customer s life and wellbeing.

The degree of embarrassment caused to the customer.

The degree of reputational damage and time spent mitigating.

The degree of disappointment caused to the customer.

The degree of distress and anxiety caused to the customer.

The length of time the disruption is caused to the customer.

The reduced living standard caused to the customer.

The lost opportunity for a significantly different lifestyle caused to the customer.

The degree of pain and suffering caused to the customer.

The degree of vulnerability of the customer.

The long-term and/or far-reaching consequences caused to the customer.

The irreversible changes to the personal or professional life of the customer.

CIFO will also take into account the customer s conduct in determining the amount of any award for distress and inconvenience. CIFO will generally take into account such factors as:

whether the customer could have taken reasonable steps to mitigate the effect of the FSP s error; and/or

whether the conduct of the customer contributed to the incident that gave rise to the distress and inconvenience.

INTEREST AWARDS

CIFO might tell an FSP to pay interest on top of (or as part of) any payment we recommend. Interest on an award is usually calculated from the date the customer should have had the money until the date it was actually paid. This additional compensation accounts for the fact that the FSP arguably could have, and should have, made the funds available to the customer throughout the period since the incident occurred to when the compensation is paid.

We can award interest in three ways:

As part of the award itself. For example, we might tell the FSP to refund interest it charged the customer on their mortgage if they were incorrectly paying a higher amount.

On top of a financial award. For example, if the customer was deprived of money meaning they

INSIGHT INTO OUR APPROACH UNDERSTANDING CIFO S GENERAL APPROACH TO COMPENSATION

did not have it available to use we can tell the FSP to pay interest on top of the money award. After the financial award has been calculated. For example, if there is an unreasonable delay in settling a complaint following an ombudsman decision. We can decide that 8% simple interest should start to accrue until the award is paid.

In most cases, we think a rate of 8% simple interest per year is appropriate to reflect the cost of being deprived of money in the past. We would not normally use the current rates paid on deposit accounts as a benchmark. This is because the rates of interest customers have to pay in order to access funds to replace the funds lost are usually much higher. This rate takes also into account that:

the rate is gross before tax is deducted;

it often applies to losses at times when different base rates applied; and

current interest rates charged on overdrafts and loans may not have reduced in line with the base rate.

In some cases, we can use a different rate if we think it is fair to do so. For example, if we think the money a customer was deprived of might have been used to pay a credit card bill, we might use the higher interest rate they were charged on the outstanding credit

card balance instead.

We note that most customers will have to pay at least a basic rate of income tax.

COSTS AWARDS

Occasionally, we might tell an FSP to reimburse some or all of the costs a customer reasonably incurred. Costs awards are not common, but we need to think about what is fair in each individual case. As CIFO is a free service operating in a non-legalistic manner, we do not normally reimburse for legal advice or other professional expenses if, in our view, they were not reasonably required in the circumstances.

Costs awards can also include interest.

DIRECTIONS

We might decide that an FSP needs to put things

right in a way that does not involve paying money. For example, amending an error in a customer s credit file or issuing a letter of apology.

HOW COMPENSATION IS PAID

In most cases, FSPs should pay the compensation amount that we award directly to their customer.

But this is not always appropriate. For example, if the customer owes a debt to an FSP, we might say it is reasonable to offset any compensation against the debt owed. CIFO would only do this where we think the complaint would be fairly addressed by doing so.

In some other circumstances, for example where there is a trust in place holding investment or pension assets, we may direct that payment be made directly to the trust to restore the trust assets that may have been affected by the FSP s error or omission. In this way we avoid or minimise any undue impact on the trust itself and any potential legal, confidentiality or taxation implications which could arise.

CALCULATING COMPENSATION - GENERAL

Sometimes we will recommend that an FSP follow a formula to work out the right amount of money

to pay to the customer. This might be because the calculations involve information that CIFO does not have but is on the FSP s own systems or is available from a third party, such as an actuary.

We might also ask an FSP to re-work an account for example if the customer has been charged an incorrect interest rate and they incurred additional charges or costs as a result. Where we tell the FSP the basis on which to pay compensation, we will always explain the principle behind the calculation to customers so that they can understand what was involved.

INSIGHT INTO OUR APPROACH UNDERSTANDING CIFO S GENERAL APPROACH TO COMPENSATION

CALCULATING COMPENSATION - INVESTMENT-RELATED COMPLAINTS

Investment-related complaints require a more specific approach to determining compensation. Where we think an FSP gave their customer unsuitable investment advice, we might tell the FSP to compare the value of the actual investment with a suitable investment or benchmark portfolio of suitable investments that was available at the time.

Where it is not clear what product a complainant

may otherwise have invested into, CIFO uses the ARC Private Client Indices (PCI) as an appropriate comparative benchmark. The PCI is produced

by Asset Risk Consultants Limited (ARC) using performance data gathered from 68 contributing portfolio managers, many of which are based in the Channel Islands. This affords it a particular relevance to investment complaints brought to CIFO as opposed to a benchmark or index predominantly focused on UK-based firms or investments.

The PCI has four benchmarks which measure the average performance of portfolios of varying levels of risk. The benchmarks are listed below from lowest to highest risk:

Cautious Balanced Steady Growth Equity Risk

CIFO is aware that some investment firms use more than four risk profiles when assigning a risk rating to a customer. Where a complainant appears to straddle the border between two PCI risk profiles, CIFO will generally use the average performance of the two benchmarks to calculate compensation.

To calculate compensation for a single unsuitable investment which is no longer worth anything, CIFO will run the benchmark from the original date

of investment up until the point the unsuitable investment was either sold, became illiquid, or the date of CIFO s final decision. If the PCI indicates that a suitably invested portfolio would have increased

in value during the corresponding period, this percentage growth will be added to the complainant s original invested amount in order to calculate total compensation payable.

It is important to note that the value of any investment, even those which are suitable, can go up or down. If the PCI indicates that an alternative investment would have lost value in the invested period, CIFO is likely only to award the amount that the investment would have been worth had it been invested suitably. As a result of actual market performance, this may result in the complainant receiving less than they originally invested.

In some circumstances, CIFO will need to undertake more complex calculations to come to a fair and reasonable settlement. The following factors may affect the amount of compensation or type of resolution determined by CIFO in an investment complaint:

The unsuitable investment had, or still has, some realisable value.

The unsuitable investment has not caused a loss and/or has actually increased in value.

The complainant has received income from the unsuitable investment.

The unsuitable investment has not yet matured, and its value cannot be easily determined before a certain future date.

The unsuitable investment has value but cannot currently be sold, for example an investment into a fund which has been suspended.

CIFO will take all of these factors into account to ensure that the complainant is placed in the position they would have been but for the error made by the FSP.

INSIGHT INTO OUR APPROACH UNDERSTANDING CIFO S GENERAL APPROACH TO COMPENSATION

Examples of Loss Calculation Investment-Related Complaints

Where an unsuitable investment has failed entirely and has no value, CIFO will compensate the invested amount plus the return which could otherwise have been generated with reference to the PCI which accords with the complainant s risk profile:

If the PCI suggests that the investment would have lost value, even if suitably invested, CIFO will only compensate the value of the investment as it would have stood according to the PCI:

If the investment has already been sold, CIFO will remove the proceeds received from the sale from the final compensation amount to avoid overcompensating the complainant:

Similarly, if the complainant has received income from the investment during the time invested, this will also be removed from the final compensation amount:

ARC Benchmark  Investment Sale  Investment

ARC Benchmark  Total Invested Amount Investment  Proceeds Already  Income Already

to Date Compensation

Return (+) Received (-) Received (-)

£10,000 10% +£1,000 -£2,000 -£1,000 £8,000

INSIGHT INTO OUR APPROACH UNDERSTANDING CIFO S GENERAL APPROACH TO COMPENSATION

In the event an unsuitable investment has increased in value and overperformed the PCI which accords to the complainant s risk profile, CIFO will generally decide not to award any compensation to the complainant:

In the event an unsuitable investment has been suspended, or has not yet matured, CIFO will generally take one of the following approaches depending on the wishes of the complainant:

Scenario 1: Request that the complainant immediately sell the investment, thereby crystalising the loss and allowing CIFO to proceed with calculating compensation up to the point of sale.

Scenario 2: Order the FSP to take back the unsuitable investment, along with the right to any future proceeds in the event the investment matures or is no longer suspended and compensate the complainant for the total value of the investment and any PCI return up until the date of transfer to the FSP.

Scenario 1

ARC Benchmark

Current  Loss on  ARC Benchmark

Invested  on Invested  Total

Investment  Invested  Investment

Amount Amount to Date  Compensation

Sale Value Amount Return (+)

of Sale

£10,000 £3,000 £7,000 10% £1,000 £8,000

Scenario 2

Amount FSP

ARC Benchmark

Current  Loss on  to Pay as  ARC Benchmark

Invested  on Invested  Total

Investment  Invested  Consideration  Investment

Amount Amount to Date  Compensation

Value Amount for Transfer of  Return (+)

of Transfer

Investment

£10,000 ? ? £10,000 10% £1,000 £11,000

ANNEX 7

INTERNATIONAL ENGAGEMENT

Given the international nature of the financial services sector in the Channel Islands, it is appropriate that CIFO has formed relationships with various international bodies active in the area of ombudsman practice, dispute resolution, and financial services.

The International Network of Financial Services Ombudsman Schemes (INFO Network)

CIFO continues to be an active member of the INFO Network whose membership includes about 60 financial sector bodies around the world engaged in dispute resolution for financial services consumers. The INFO Network focuses on professional development and mutual support amongst member schemes. Details on the network can be seen here.

EU Financial Dispute Resolution Network (FIN-NET)

FIN-NET is the European Union s network of financial dispute resolution schemes and helps consumers resolve cross-border complaints involving financial services. Details on the network can be seen here.

While the Channel Islands are not members of the European Union (EU), the importance of the European market for the Channel Islands financial sectors, the extensive regulatory framework being established

for the provision of financial services into the EU,

and the proportion of complainants referred to CIFO

who are resident outside the Channel Islands, make this EU body highly relevant for CIFO. As one of three Official Observers and Associate Members of the FIN- NET network (the other two being the Swiss Banking Ombudsman and the Swiss Ombudsman of Private Insurance and of Suva), CIFO attends the semi-annual meetings of FIN-NET. CIFO is also in regular contact with individual FIN-NET member schemes to refer complaints appropriately resolved by those schemes and to accept referrals of complaints from FIN-NET member schemes that fall within CIFO s mandate to resolve.

Ombudsman Association (OA)

CIFO is an active member of the Ombudsman Association (the OA, formerly the British and Irish Ombudsman Association or BIOA) which represents both public

and private sector ombudsman schemes in the United Kingdom, Ireland, and Britain s Crown Dependencies

and Overseas Territories. CIFO s Principal Ombudsman serves on the OA board of directors. Details on this association can be seen here.

This professional body of ombudsman practitioners seeks to promote and support the development of ombudsman schemes and provides opportunities to engage in professional development and policy advocacy in the area of dispute resolution. Through this body, financial sector ombudsman schemes interact with other ombudsman practitioners involved in dispute resolution across a broad range of sectors where alternative dispute resolution offers a compelling value proposition to society.

UK Financial Ombudsman Service (UK FOS)

Given the close relationship between the Channel Islands and the UK and the fact that many financial services providers in the Channel Islands are branches or subsidiaries of UK-based providers, it is not unexpected that UK changes to financial sector regulations and financial dispute resolution are followed closely by CIFO.

Recent developments in the UK which were notable given CIFO s complaints experience included regulatory developments involving authorised push payment (APP) fraud, pension plan transfers, and the UK Supreme Court decisions on business interruption insurance claims arising from business losses attributable to the Covid-19 pandemic.

APPENDIX 2021 AUDITED FINANCIAL STATEMENTS

Channel Islands Financial Ombudsman

CHANNEL ISLANDS FINANCIAL OMBUDSMAN Audited financial statements

for the year ended

31 December 2021

INFORMATION

The financial statements of the Channel Islands Financial Ombudsman are the combined financial stahments of the Office of Financial Services Ombudsman Guernsey and the Office of the Financial Services Ombudsman Jersey, referred to in the body of the financial statements as the OFSOs.

Directors  David Thomas - Chairman

John Curran  Term ended 30 January 2022

Deborah Guillou

John Mills

Robert Girard  Term commenced 31 January 20!2 Antony Townsend  Term commenced 31 January 20!2

Administration Office  Channel Islands Financial Ombudsman

No 3 The Forum

Grenville Street

St Helier

Jersey

JE24UF

Independent auditors  RSM Channel Islands (Audit) Limited

PO Box 179

40 Esplanade

St Helier

Jersey

JE49RJ

Principal Ombudsman   Douglas Melville

CONTENTS

Page Chairman's statement  1 Report of the Directors  2-3 Auditor's report  4-6 Statement of income and retained earnings  7 Statement of financial position  8 Statement of cash flows  9 Notes to the financial statements  10- 20