James Moore: Banks behaving badly may lead to outsourcing the ombudsman

Outlook Problem with your credit card? Fear not: Your bank's helpful staff in Mumbai will sort it, so long as your issue is on the right menu. Issue with its IT systems? Those nice chaps from R. Ubbish Technical Solutions will investigate.

Banks love outsourcing. It generates huge, short-term savings that chief executives and finance directors lap up because they can show off colourful, PowerPoint presentations to analysts. Any problems only tend to show in the longer term and are therefore an issue for the next guy to deal with.

Yesterday, the Conservative MP Mark Garnier, a former investment banker, suggested the trend has gone further than we thought.

While grilling various Barclays compliance, audit and risk people under the baleful eye of investment banking head honcho Rich Ricci at a panel of the Parliamentary Commission on Banking Standards, Mr Garnier argued that banks have, in effect, outsourced their complaints departments. And he's got a point.

The body which now oversees the really serious complaints about Barclays (and the others) is the Financial Ombudsman Service (FOS), which is now so swamped with work it might need to call on Mumbai just to meet its mushrooming need for bright case handlers.

Largely that's because of the payment protection insurance scandal, where a stunning 93 per cent of gripes are upheld, according to Mr Garnier.

That does make it something of an outlier, but the numbers are still high in other areas. Some 40 per cent of general banking complaints get upheld, 32 per cent relating to home finance, 50 per cent about investments and a third relating to insurance.

What we don't know from these figures is how many complaints rejected by banks don't even get to the FOS because those involved give up.

I've heard numerous stories from people where this is the case. They've become so cynical about what they see as a system weighted against them they never get as far as filling in the FOS form.

Banks are well aware of this. So they'll correct blatant errors, where they have been caught bang to rights. But when it comes to more marginal calls, it pays them to say no and leave it to the ombudsman to take over because so many people just give up.

Still, don't worry. Mr Ricci is on the case. He's the man behind Project Mango, a review of Barclay's investment bank. Perhaps it could be extended to the retail side.

Mr Ricci says Barclays really wants to understand why people don't like it so much. So 120 top bods got together and listened to all sorts of clever people and consultants from other businesses that have had the odd reputational problem. During that session they heard a lot from zoos. No, I'm not making this up. But I do wonder what the zoo keepers said about their charges' behaviour after being tossed a bunch of mangoes.