Should the Ombudsman act as a mediator?

This is one of the questions posed by the DWP in its consultation on the Pensions Ombudsman's dispute resolution powers and jurisdiction issued just before Christmas. The consultation lacks detail on what is meant by mediation, simply suggesting that provision should be made for an Early Resolution Service and to allow the Pensions Ombudsman to ‘mediate’ and ‘resolve’ complaints and disputes before a determination.

It is important that this consultation is taking place now, because the role of the Pensions Ombudsman's service is evolving.

Alongside its core 'arbitrator' function, in March last year, the Ombudsman's service inherited the dispute resolution work previously carried out by The Pensions Advisory Service (TPAS). This is a historic change as this service has been delivered by TPAS since its inception in the 1980s.

In addition, in an effort to reduce the time taken to bring disputes to a conclusion, the Ombudsman's service has sought to bring more disputes to an end informally. In 2017/18 around 70% of cases were resolved in this way; and average timescales for resolving disputes were halved to five months.

Blurring the lines

Although these changes may have positive benefits for complainants and respondents, the lines between the Ombudsman's different roles are becoming blurred. If a new mediation function is introduced it would mean that the Ombudsman's service could conceivably play the role of adviser, mediator and arbitrator in relation to the same dispute.

Establishing a clear separation between these different functions and the different stages of the dispute resolution process is essential to ensure that the Ombudsman's investigations and determinations and any new early resolution process continue to be seen to be impartial and fair by all parties.

In particular, there needs to be clarity regarding:

• the process to be followed and how each stage of the process is initiated
• the options available to the parties, and
• the role of the Ombudsman at each stage of the process and the powers available to it.

The Ombudsman as mediator

Mediation, as it is generally understood, involves a third party acting as an honest broker between the parties with the aim of trying to help them reach agreement over how to resolve the dispute. The mediator is not acting as an adjudicator. This is different to the informal dispute resolution processes currently adopted by the Ombudsman's service in which an 'adjudicator' shares their view of the likely outcome with the parties in an attempt to encourage a settlement. If any of the parties do not agree with the adjudicator's opinion, the matter is referred to an Ombudsman for a determination.

Introducing a formal mediation process facilitated by the Ombudsman's service would be a positive thing. This could form part of a 3 stage process for resolving disputes:

Stage 1 – a scheme's Internal Dispute Resolution Procedure

Stage 2 – mediation

Stage 3 – a full investigation and determination by the Ombudsman.

However, if mediation is introduced, it should be recognised as a formal step in the process and it should only be available where all parties agree to it and on the basis that:

• during the mediation process the representative from the Ombudsman's service is simply acting as a broker between the parties with the aim of trying to help them reach agreement over how to resolve the dispute
• any settlement at this stage is a matter for agreement between the parties and the Ombudsman (or its representatives) would not have the power, or seek informally, to direct how the matter should be resolved or issue a determination at this stage
• either party can bring the mediation process to an end and request to move to a full investigation at any time, and
• (to encourage an open dialogue) all communications during the mediation process are on a without prejudice basis and cannot be taken into account should the matter move on to a full investigation and determination.

If the parties fail to reach agreement and request to move to a full investigation, that investigation should be conducted by a new person at the Ombudsman service who has no prior connection with the matter and information barriers should be established.

It is crucial that the outcome of any early resolution process should be a matter for the parties to agree and the Ombudsman should not have the power to make awards or give directions at this stage as this would blur the lines between mediation and a full investigation, undermining any new mediation process. The Ombudsman's powers should be limited to recognising any agreement that is reached and closing the matter, where the parties agree to this.

Ombudsman as adviser

It is essential that the advisory arm of the Ombudsman's service is also distinct and separate from its role as arbitrator and any new mediation function that is given to it. In short, this means that:

• anyone at the Ombudsman's service who gives support or advice to a member should not be involved in the matter should it progress to mediation and / or a formal investigation, and
• information barriers should be established between the Ombudsman's advice service, its mediation function and its arbitration function.

The Ombudsman's service is evolving and much of this change is positive. However, as its functions expand, it is vital that its role at each stage of the dispute resolution process is clear and distinct in order to maintain confidence in the service.