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Establishing a sector-wide approach to compensation
Richard Blakeway, the housing ombudsman, explores seven lessons for how landlords can handle compensation better
Do you think the women affected by the equalisation of state pensions should be awarded £10bn in compensation? This was a high-profile and contentious decision by an ombudsman, but not the only one. The Pensions Ombudsman decided trustees were personally liable to pay the sum of £10m, after failings a couple of years ago.
Perhaps closer to home, £30,000 was the amount awarded by the Local Government and Social Care Ombudsman after a disabled man was left unable to freely access his temporary accommodation because of a step.
In contrast, the amounts awarded by the Housing Ombudsman are more modest, but no less contentious when budgets are tight. And we have awarded more, £6m last year, partly because of a doubling in the volume of decisions, with almost 2,000 determinations issued in the past three months alone. Most older cases with us are pending because we are awaiting evidence.
The number of cases where we have awarded more than £10,000 is still in single figures and the most is about £20,000. That a small number of providers, both council and housing association, have been involved in those higher awards is a point of reflection for them.
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Yet the £6m troubles me, because it is indicative of the failings we see and the prolonged period of detriment for some residents. It underscores how vital it is for landlords to learn the lessons of our decisions, so that funding can go into services rather than redress service failings.
So, this piece sets out seven key lessons for landlords to handle compensation better and to establish an approach, understood from the boardroom to frontline staff, that is fair and reasonable across the sector. It is also part of the sector understanding the ombudsman better and reimagining its relationship with us to promote learning and improvement, rather than firefighting complaints.
Fundamental to this is understanding the purpose of our awards. It is intended to put the person back in the position they would have been if things had not gone wrong. It is not punitive nor a regulatory fine; that is a matter for the Regulator of Social Housing. Some landlords may not feel this is the case, but I cannot stress enough how compensation is only one of the remedies we make.
Over 60% of remedies are focused on prevention and taking action, such as a repair, which the household is desperate to happen, and is long overdue under the landlord’s obligations or own policy. This last point is essential, as our work is grounded in an impartial assessment of the landlord’s own commitments in the individual circumstances of each case.
A robust and reasonable approach by the ombudsman is also essential for residents to have confidence in complaints as a genuine alternative to the courts. Some commentators will suggest the awards are greater in the courts, although there are areas, such as personal injury, where we are clear it is a matter for the court rather than an ombudsman. This is overstated, but our redress (financial or not) remains essential and important.
Lesson one: Time
Every week we handle cases where the damp and mould, for example, is similar to the images seen on television for events that took place over months or years. Independent of individual circumstances, the length of time will impact the compensation calculation.
This relates to loss of enjoyment of the home, a consideration introduced in our remedies guidance in October 2022, and one of the primary reasons, alongside completing more investigations, for an overall increase in our awards.
Loss of enjoyment can be affected by the individual circumstances, but delays or inadequate action will compound any award for the loss, or limited use, of rooms. When making this award, we may consider the rent charged during the period of service failure.
Consider the four-year period where a landlord did not respond reasonably to a leak. A specialist health worker who visited the resident said the mould present was the worst she had seen in 14 years in the role. The compensation we awarded was based on 49 months where the landlord’s actions were unreasonable. The landlord missed several opportunities to prevent these service failings and, ultimately, we awarded £15,000 in compensation, based on the rent charged to this individual resident.
Had the landlord taken action in line with its policy, the works should have been done within 21 days. The lessons of this case are worth considering in the context of Awaab’s Law.
Lesson two: Individual circumstances
The impact of a service failure can affect residents in different ways, even if, superficially, it looks the same.
An elderly person who missed a medical appointment waiting for an engineer to repair a boiler who never turned up, and whose heating loss will last longer as a result, may receive a different level of compensation compared with someone else who experiences the same service failure.
Another recent case saw us award a very substantial sum to a disabled resident who was unable to access all the rooms in their home because of a failure to progress adaptations. The sum was intimately linked to that resident’s mobility considerations.
Insufficient attention to individual circumstances may have produced a complaint itself, only to be compounded by a failure of redress. Yet while these are different circumstances, the ombudsman considers them under the same assessment process. Just to compare the sums can be superficial and misleading.
This misreading of our casework is why some landlords will say the ombudsman’s decisions can be inconsistent.
Lesson three: A clear compensation framework
Not all landlords will have a compensation policy, or it won’t be separate from their complaints policy. If that’s your organisation, I would encourage you to get one. Without one, it can lead to haphazard or inconsistent payments.
On principle, some landlords do not accept the concept of compensation and instead require a claim to be submitted. This was the focus of one of our special investigation reports, and the landlord has subsequently changed its position. Such approaches are unfair and against the dispute resolution principles established by the ombudsman more than a decade ago, and integral to the new statutory Complaint Handling Code.
Of course, having a policy doesn’t mean it’s any good, up to date or fair. One landlord’s policy stated it would only refund for overcharging services from the point a complaint was made, not from when it overcharged – it thought its policy was reasonable, but we considered it unfair.
Another landlord declined compensation because it wasn’t insured for the failings, but the boundaries for compensation cannot be set by insurance policies. (Indeed, more generally, better assistance is needed from some landlords to help residents progress insurance claims.)
A compensation policy, like all good policies, should not be an expression of current practice, but a strategic review of your approach, monitored and updated. There are some payments for missed appointments, heating or other services which are outdated and bear no relationship to current costs.
Lesson four: Effectiveness
Is there a disconnect between your policy and practice? Or between decisions in your stage 2 and by the ombudsman? Often our higher awards are because a landlord has a policy, but did not apply it. This may be because of human error in making the calculation, but more typically it is because it chose not to, without explanation.
Take the example of the landlord’s policy that provides for a weekly award for distress, based on the severity of the issue. This is a reasonable approach. However, in practice, the landlord deemed the impact of one leak we investigated to be minimal, despite evident health vulnerabilities, including a child, and the family being decanted earlier this year because the home was unhabitable. Moreover, the landlord only applied its formula to a five-month period, when the evidence for the leak was for four years.
Increasingly, I have also seen cases where the landlord has awarded reasonable compensation during its complaints process but then not taken the action to resolve the substantive issue. Inevitably, this can lead to further compensation, which was avoidable.
Lesson five: Communication
Too often, it is not clear for what and why compensation has been paid in cases. If it is unclear, it risks the case escalating, because the resident’s expectations have not been managed transparently, areas that require redress have been missed, or inconsistent practice has been promoted in the complaint procedure.
A good example of this is that time and trouble should not be conflated with distress and inconvenience: these are different things.
Lesson six: Avoid arbitrary payments
Consider the extraordinary decision by a landlord to increase its final offer of £100 to £4,500 three months later, when our formal investigation started. Why? It is not an isolated case, for the landlord or the sector.
It is inherently unfair to other residents, risks raising the expectations of residents, and renders complaints to financial transactions, losing sight of the need to learn lessons.
Lesson seven: Learning
My seventh lesson is vital. We want to talk about the wide range of decisions we make, 90% or more of which are not severe maladministration (and not always the highest award of compensation). But I am conscious that some senior leaders are only looking at those decisions. Where we have not upheld a finding, what worked here, but not elsewhere?
Where we make a finding of reasonable redress, this shows a remedies policy working in practice, but that practice may not be consistent. Our Centre for Learning helps to provide focus and support for landlords to expand their knowledge from complaints.
Compensation is a challenging and contentious area and perhaps always will be. But in addition to these lessons, there is more we can do to collaborate with resident groups and landlords to take the tension out of it. Looking to future development, I would like to expand our remedies policy, but I would also like to explore whether a common approach to compensation can be adopted between the ombudsman and landlord complaint teams.
To some extent, this happens now. But is something like a transparent compensation calculator, available to residents as well, and sensitive to individual circumstances, achievable or desirable?
The divergent practices in the sector are not sustainable. If we use a landlord’s policy to calculate room loss, but that policy is different to another landlord’s, it may be a reasonable approach, but is it fair?
A revolution in awareness and access to complaints is happening. This is a good thing, and long overdue. But everyone wants earlier resolution rather than escalation to us.
While I have seen very little evidence of complaints coming to us for monetary gain, as is sometimes suggested, I can see how embedding these lessons and an impartial approach at a landlord level will benefit residents and landlords alike.
Richard Blakeway, housing ombudsman
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