Juggling conflicting demands: the case of the UK Financial Ombudsman Service

This article builds upon current scholarship regarding regulatory enforcement to analyze and theorize the little-researched context of public bodies' handling of consumer complaints against firms. The analysis is based on a case study of the Financial Ombudsman Service (FOS), which is a British public agency that handles consumer complaints regarding the retail selling of financial products. The study documents and seeks to explain the FOS' and firms' interaction and their choices between cooperative and adversarial strategies. It finds that the FOS' interaction with firms oscillated between cooperative informal conciliation and adversarial standardized determination of complaints. Firms resisted informal conciliation of complaints when concerned that their agreement to redress an individual complainant might be interpreted by the regulator (the Financial Services Authority), or the media, as entailing compensation awards to a large number of other customers in similar circumstances. Equally, the ombudsman was inclined toward an adversarial, precedent-bound approach to complaints when facing external risks to its autonomy and reputation. These findings form the basis for the formulation of hypotheses regarding the strategic interaction of other third-party complaint handling schemes with both private and public service providers. Furthermore, the findings stress the importance of analyzing regulatory encounters as multiactor games in which firms and regulators interact amid conflicting demands and uncertainties posed by other actors and institutions in their environment.