This article is about the Financial Ombudsman Service in the UK. For the Australian Financial Ombudsman Service, see Financial Ombudsman Service (Australia).
Financial Ombudsman Service
Formation
Operational: April 2000 Statutory footing: 18June2001(2001-06-18)[1]
The Financial Ombudsman Service is an ombudsman in the United Kingdom. It was established in 2000, and given statutory powers in 2001 by the Financial Services and Markets Act 2000, to help settle disputes between consumers and UK-based businesses providing financial services, such as banks, building societies, insurance companies, investment firms, financial advisers and finance companies.[2][3][4]
The Financial Ombudsman Service can deal with complaints from consumers about most financial matters including, for example: banking, insurance, mortgages, pensions, savings and investments, credit cards and store cards, loans and credit, hire purchase and pawnbroking, financial advice, stocks, shares, unit trusts and bonds.
From November 2009 money-transfer operators also came under the ombudsman's remit.
Before the ombudsman can step in, the consumer must first give the business they are unhappy with the opportunity to look into the complaint itself – before the ombudsman service can make a decision on the dispute. The business has a maximum of 8 weeks to resolve the complaint. If they do not resolve it within 8 weeks or the consumer is not happy with the response then they can refer the complaint to the ombudsman service.[5]
The ombudsman has the authority to request or require a company to offer financial compensation, correct a consumer's credit file, or offer an apology, as a means of dispute resolution.[6]
Processes
The ombudsman makes decisions on the basis of what it believes is fair and reasonable in the particular circumstances of each case. In making decisions on individual complaints, the law[7][8] requires the ombudsman to take into account: relevant law and regulations; regulator's rules, guidance and standards; codes of practice; and (where appropriate) what he/she considers to have been good industry practice at the relevant time.[9]
Funding
The Financial Ombudsman Service is funded by the UK's financial services sector through a combination of statutory levies and case fees.[10][11] These are paid by financial businesses that are regulated by the Financial Conduct Authority (FCA) or licensed by the Office of Fair Trading (OFT) and are automatically covered by law by the ombudsman service. The payment of these statutory levies and fees is not optional and they are payable whether or not a complaint is upheld by the Financial Ombudsman Service. The service is free to consumers. Between 2006 and 2009 the ombudsman service made use of case-handling services provided by Deloitte LLP, to handle the growing volumes of work generated by payment protection insurance complaints.
Impartiality
The Financial Ombudsman Service publishes the proportion of complaints it upholds in favour of consumers. Across all complaints in 2013/2014 the ombudsman found 58% in favour of consumers.[12]
The ombudsman was set up by parliament to be an impartial and independent body, though its decisions can be criticised by the side that loses.[13][14][15][16][17][18]
Independent commentators acknowledge that the ombudsman service is a valuable free service for consumers – although those who feel they have "lost" a complaint might understandably feel let down and want to question the ombudsman's impartiality.[19][20] Some consumers have questioned the amount of redress awarded by the ombudsman[21] while many businesses expect the ombudsman to apply the compensation cap rigidly and lobbied against the increase (in January 2012) from £100,000 to £150,000 in the maximum compensation the ombudsman can tell a business to pay.[citation needed]
Various websites have been set up to complain about the Financial Ombudsman's partiality – usually by people who disagree with particular ombudsman decisions.[22][23]
Complaints-handling performance of individual financial companies
Since September 2009 the Financial Ombudsman Service has been publishing complaints data on its website every six months about named individual businesses. The data provided relates to businesses which have 30 or more new cases, or 30 or more resolved cases, in each six-month period. The data shows the number of new complaints, and the proportion of complaints upheld in favour of consumers.
just under 200 businesses (out of more than 100,000 covered by the ombudsman service) together generate around 90% of the complaints workload,
the number of complaints relating to each individual business ranges from 30 to over 45,000,
the proportion of cases upheld in favour of the consumer varies substantially from business to business – between 3% and 100%.
Budget and staffing levels
The entire ombudsman staff in 2007 (including substantial number of ancillary staff) was 960. They managed to handle 627,814 initial enquiries and close 111,673 cases which had been sent to for adjudication. The BBC reported in September 2007 that the ombudsman planned to reduce staff numbers to 600, reflecting the decline in mortgage endowment complaints.[25] By December 2009 ombudsman staff had increased to over 1,000 – reflecting a substantially increased workload of 200,000 cases. Currently there are 4,500 people working at the ombudsman – reflecting a substantially increased workload of over half a million cases last year (2014/2015).
Staffing levels at the Financial Ombudsman Service fluctuate – as does the budget year-on-year – to match the volume of disputes it is dealing with. The number of staff required – and forecasts for complaints volumes and workload – are consulted on publicly each year in the ombudsman's corporate plan and budget.[26][27]
Status of Ombudsman decisions
Around 90% of the disputes that the Financial Ombudsman Service resolves are settled at earlier informal stages, without the intervention of an ombudsman. An ombudsman's decision is the final stage of the Financial Ombudsman Service's process.[28] If the consumer with the complaint accepts a final decision, it is binding on both parties and enforceable in court.[29][30]
But if the consumer chooses not to accept an ombudsman's decision, their legal rights remain unaffected and they can take the matter to court instead – subject to any requirements set by the courts. However, independent commentators generally recommend that consumers should use the ombudsman service rather than the courts[31][32][33] as the outcome of court cases can be unexpected, disappointing and costly.[34]
However, there have been judicial reviews against the ombudsman, brought by financial services companies who have to accept the ombudsman's decisions which are binding in law. For example, in January 2011 the British Bankers Association – on behalf of a number of high-street banks – brought a judicial review against the ombudsman and the FSA on the approach to PPI complaints handling. The High Court rejected the banks' challenge and endorsed the approach taken by the ombudsman and the FSA.[35] The difficulty in winning a judicial review is that the Financial Services and Markets Act 2000[36] which led to the establishment of the Financial Ombudsman Service requires the ombudsman to make decisions "by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case".[37]
In a judicial review of an ombudsman's decision brought by an independent financial adviser (IFA), the judge further clarified that the ombudsman is "free to make an award different from that which a court applying the law would make".[38] This means that a litigant has to surmount the very high hurdle of proving that the entirety of the ombudsman's decision was so unfair that no right minded person would have made a similar decision. This is referred to as the Wednesbury unreasonableness principle which applies to any application for judicial review under made due to the irrationality of the decision.
Accountability
The board of the Financial Ombudsman Service[39] is appointed by the Financial Conduct Authority – and the appointment of the chairman is approved by HM Treasury. The board's role includes guarding the independence of the ombudsman – from undue influence by the financial services industry and trade bodies, regulators, consumer groups and government. Board members are non-executive – they have no involvement in individual complaints.
The ombudsman can be asked to appear before the Parliamentary Treasury Select Committee who can be contacted by the consumer's MP.
Consumer satisfaction surveys – and surveys of businesses covered by the ombudsman – are conducted by the Financial Ombudsman Service on an ongoing basis. The results are published annually in the ombudsman's annual review.[40][41]
Customers of the Financial Ombudsman Service – both consumers and businesses – can seek redress from the Independent Assessor[42] if they are unhappy with the level of service they have received.[43]
The Independent Assessor is appointed by the board of the Financial Ombudsman Service. The current holder of the post is Gillian Guy, previously Chief Executive of Citizens Advice for England and Wales, whose appointment was announced by the Financial Ombudsman Service on 26 August 2020 to take effect from October 2020.[44]
The Independent Assessor reports formally to the board of the Financial Ombudsman Service – which publishes a report in full each year as part of the Financial Ombudsman Service's annual review.[45][46][47][48][49][50]
Triennial reviews
The non-executive board of the Financial Ombudsman Service commissions three-yearly external reviews of the service.[citation needed]
This article needs to be updated. Please help update this article to reflect recent events or newly available information.(October 2015)
Employees have left overwhelmingly negative reviews on Glassdoor (with an average rating of 1.9 out of 5), blaming a decline in quality on recent (2016–2019) changes in the way the organisation is structured, although since then the rating has steadily improved.[52][53]
Timeliness – In the years since the ombudsman service was created, some consumers, businesses and commentators have suggested that the ombudsman takes too long to look at some complaints. In previous years, the ombudsman has seen complaints about some topical financial matters take longer to resolve than others (notably, mortgage endowments and payment protection insurance (PPI) due to the sheer volume of complaints received by the service.[54] The ombudsman's published annual review (2012/2013) showed 58% of all disputes were sorted out within six months – and 43% of non-PPI cases within three months.[55]
Questions as to their impartiality[56] due to the manner in which they're funded by the financial services, and that many employees have worked for financial services firms, mostly as solicitors who make up 38% of their brethren.[57][58] Though the ombudsman service currently upholds over 49% of complaints in favour of the consumer, there have been complaints that the awards are inadequate.[59]
As an ombudsman's decision is the final stage in the service's process, consumers who remain unhappy would need to pursue their complaint through the court.[60] (However no alternative has been suggested.)
Lack of fifteen-year long-stop: There is no fifteen-year "long-stop" rule in the complaints-handling rules made under the Financial Services and Markets Act. In its policy statement published in January 2003 – and following subsequent reviews – the Financial Services Authority (FSA) set out why there is no fifteen-year limitation period in the complaints-handling rules, stating: "We do not consider it is in the interests of consumers to rule out the possibility of complaints being dealt with outside the 15-year period that would apply to court cases. Nor do we consider this necessary to prevent hardship to firms."
Dispatches shown on Channel 4 went under cover at the FOS in 2017 and uncovered a number of issues. These included junior staff saying that they googled cases for answers, never told lenders to write off debts and general mishandling of cases. MPs called for a national inquiry into its work.[61] An independent investigation in 2018 found that the FOS "is performing at a level consistent with its publicly stated objectives."[62]
International Network of Financial Services Ombudsman Schemes
A list of all members can be found at the International Network's website.
Related Research Articles
The European Ombudsman is an inter-institutional body of the European Union that holds the institutions, bodies and agencies of the EU to account, and promotes good administration. The Ombudsman helps people, businesses and organisations facing problems with the EU administration by investigating complaints, as well as by proactively looking into broader systemic issues. The current Ombudsman is Emily O'Reilly.
The Financial Services Authority (FSA) was a quasi-judicial body accountable for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 1985. Its board was appointed by the Treasury, although it operated independently of government. It was structured as a company limited by guarantee and was funded entirely by fees charged to the financial services industry.
The Australian Securities and Investments Commission (ASIC) is an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to protect Australian consumers, investors and creditors. ASIC was established on 1 July 1998 following recommendations from the Wallis Inquiry. ASIC's authority and scope are determined by the Australian Securities and Investments Commission Act 2001.
The Parliamentary and Health Service Ombudsman (PHSO) comprises the offices of the Parliamentary Commissioner for Administration (PCA) and the Health Service Commissioner for England (HSC). The Ombudsman is responsible for considering complaints by the public that UK Government departments, public authorities and the National Health Service in England have not acted properly or fairly or have provided a poor service.
The Local Government and Social Care Ombudsman (LGSCO), legally the Commission for Local Administration in England and formerly known as the Local Government Ombudsman (LGO), investigates complaints from members of the public about councils and some other some other authorities and organisations providing public services in England. It also investigates complaints about registered adult social care providers. It is the last stage of the complaints process, for people who have given the council or provider opportunity to resolve the issue first. It is a free service. Similar duties are carried out by the Public Services Ombudsman for Wales, the Scottish Public Services Ombudsman and the Northern Ireland Ombudsman. The current (interim) Local Government and Social Care Ombudsman is Paul Najsarek, whose appointment commenced on 1 April 2023.
The Superannuation Complaints Tribunal is an independent statutory body established by the Australian Government to deal with complaints about superannuation.
Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent businesses from engaging in fraud or specified unfair practices to gain an advantage over competitors or to mislead consumers. They may also provide additional protection for the general public which may be impacted by a product even when they are not the direct purchaser or consumer of that product. For example, government regulations may require businesses to disclose detailed information about their products—particularly in areas where public health or safety is an issue, such as with food or automobiles.
The Financial Ombudsman Service (FOS) was a member-funded Australian ombudsman service that provided external dispute resolution for consumers who were unable to resolve complaints with member financial services organisations.
Ombudsmen in Australia are independent agencies who assist when a dispute arises between individuals and industry bodies or government agencies. Government ombudsman services are free to the public, like many other ombudsman and dispute resolution services, and are a means of resolving disputes outside of the court systems. Australia has an ombudsman assigned for each state; as well as an ombudsman for the Commonwealth of Australia. As laws differ between states just one process, or policy, cannot be used across the Commonwealth. All government bodies are within the jurisdiction of the ombudsman.
The Ombudsman for Banking Services and Investments (OBSI) is a Canadian organization whose responsibility is to handle the financial disputes of consumers and small businesses that could not be resolved by the customers and the financial firms on their own. The OBSI provides the service on an impartial and independent basis, and free of charge to the consumer as an alternative to the legal system.
The Property Ombudsman (TPO) scheme is an ombudsman in the United Kingdom. It has been providing consumers and property agents with an alternative dispute resolution service since 1990.
The DGCOS is an independent UK regulatory body, whose agenda includes vetting of suppliers, guaranteeing customer access to industry inspectors, and protecting members against unfounded complaints.
The Furniture & Home Improvement Ombudsman (FHIO), formerly The Furniture Ombudsman (TFO) is an independent not for profit organisation based in the United Kingdom. It specialises in alternative dispute resolution for customers of its members in the retail, furniture and home improvement industries. As a membership-based scheme, it also provides training and education services to its members which aim to raise standards, improve service and inspire consumer confidence. Kevin Grix, a non-practising barrister, was appointed the Chief Ombudsman in 2008.
Financial regulation in Australia is extensive and detailed.
The Financial Ombudsman Service (FOS) was a member-funded Australian ombudsman service that provided external dispute resolution for consumers who were unable to resolve complaints with member financial services organisations.
Natalie Anna Ceeney is a British civil servant and businessperson who has filled several senior roles in both the public and private sectors in the United Kingdom. She was chief executive of The National Archives from 2005 to 2010; chief executive and chief ombudsman of the Financial Ombudsman Service from 2010 to 2013; head of customer standards at HSBC bank from February to December 2014; and chief executive of Her Majesty's Courts and Tribunals Service from 2015 to 2016.
Walter Hugh Merricks, who qualified as an English solicitor, has held a number of senior appointments in legal and public institutions, the best known being his tenure as the inaugural Chief Ombudsman of the Financial Ombudsman Service between 1999 and 2009. He was Chair of IMPRESS, the Independent Monitor for the Press, and the law reform charity JUSTICE. He was a member of the Civil Aviation Authority's consumer panel until 2023. As class representative, he has filed a £14 billion class action claim on behalf of British consumers against MasterCard Incorporated before the Competition Appeal Tribunal.
The Scottish Legal Complaints Commission (SLCC) is a non-departmental public body responsible dealing with unresolved complaints against legal practitioners operating in Scotland. It was established under the Legal Profession and Legal Aid (Scotland) Act 2007 and came into operation on 1 October 2008, replacing the Scottish Legal Services Ombudsman.
The Australian Financial Complaints Authority or AFCA is an external dispute resolution (EDR) company for consumers who are unable to resolve complaints with member financial services organisations. It is operated as a not-for-profit company limited by guarantee and was authorised in 2018 by the then Minister for Revenue and Financial Services, Kelly O'Dwyer, in accordance with the Corporations Act 2001 (Cth).
The Financial Ombudsman Service of the Russian Federation was created in 2018 to mediate consumer rights complaints and out-of-court disputes between consumers of financial services and financial organizations. It was created under federal law on June 4, 2018 to provide legal status of the Financial Ombudsman Service, the procedure for its activities, specific rules and regulation procedures as well as consideration of citizens’ complaints scheme and other legal relations. It was designed to help resolve disputes between consumers and financial institutions providing clients and considers claims against credit institutions, insurance organizations, microfinance institutions, credit consumer cooperatives, pawnshops and non-state pension funds on a mandatory and voluntary basis
↑ "Executive Summary"(PDF). Retrieved 5 December 2011. I have been asked by the Equitable Members Action Group ('EMAG') to review the nature of the service provided by the Financial Ombudsman Service ('FOS') to Equitable Life Assurance Society (EL) complainant policyholders.
This page is based on this Wikipedia article Text is available under the CC BY-SA 4.0 license; additional terms may apply. Images, videos and audio are available under their respective licenses.
