This article on the Financial Ombudsman is by The Treasurer from Team Monevator.
I was a big fan of the BBC’s Rogue Traders. The host Matt Allwright would confront dodgy businessmen in action. He’d chase them down a street if they did a runner from the cameras. It made for a great show, though it’s since been relegated to become a part of Watchdog.
Anyone who regularly watched Allwright’s antics would be forgiven for thinking the UK is a Wild West when it comes to consumer protection.
However, despite it looking easy on the TV, being a rogue firm in Britain is actually hard work.
That’s partly because of two very valuable pieces of consumer weaponry.
I’ve previously highlighted the benefits of Section 75 of the Consumer Credit Act. I explained how this nifty bit of legislation gives you huge protection on credit card purchases.
This time I want to touch on one other big piece of consumer protection – known as the Financial Ombudsman Service.
Enter the Ombudsman
While the Financial Ombudsman Service isn’t exactly a form of legislation, it was set up by the Government back in 2000 to settle complaints between consumers and businesses that provide financial services.
The term ‘financial services’ is rather vague, but the remit of the Ombudsman safely covers banks, building societies, insurance firms, investment services, and even breakdown cover.
The Ombudsman is completely free to use, and settles disputes by what is deemed ‘fair and reasonable.’
As a result, you don’t have to be a legal eagle to be successful with a Financial Services Ombudsman claim.
If you think a financial company has treated you unfairly, then chances are, you’ve a pretty decent case.
How does the Financial Ombudsman Service work?
First things first, if you’re at odds with a financial company, you can’t just take your complaint straight to the Ombudsman.
That’s because you must first make a complaint to the financial company, outlining your grievance.
If you are dissatisfied with its response, you may wish to crank up your complaint in a follow-up.
Make it clear you aren’t prepared to back down. When you do this, explain that you are prepared to take your case to the Ombudsman.
If this does the trick, then great!
If not, then any further correspondence from the company should state that it is their final response. This is often referred to as a ‘deadlock letter.’
Once you receive this, you’ll have every right to escalate your case to the Ombudsman.
The same also applies if you don’t hear back within eight weeks.
How to start a claim with the Financial Services Ombudsman
To start a claim, you must use the official website, or call 0800 0234 567.
At this point, it’s recommended that you forward any relevant correspondence, and/or evidence supporting your claim.
If the Ombudsman needs any further information, it will reach out to you.
Claims typically take between three to nine months to resolve, though it can take longer during busy periods.
Once the Ombudsman makes its legally-binding decision, the financial company will have to put right any wrongdoing.
If the case doesn’t go your way, you do have the option of asking for the decision to be reviewed by an actual Ombudsman, rather than a caseworker.
Financial Ombudsman Service: What else is there to know?
Aside from the practical steps, here are four things that are worth knowing about the Ombudsman.
1.You can go back up to six years to make a claim
That’s right. You can submit a case to the ombudsman up to SIX YEARS after an event took place.
For example, if you were treated badly by your insurance provider a few summers ago, there may still be time to put things right.
2. You don’t have to use the Ombudsman
If you’ve suffered wrongdoing by a company, then the option to take your case to the traditional county court still exists.
However, while the Ombudsman will make a judgement on the nebulous definition of what is ‘fair and reasonable’, the court will base its decision on the letter of the law.
3. It normally applies to UK-based companies (but check)
While it may seem obvious, you typically can’t use the Ombudsman service if the company you have a grievance with isn’t based in the UK.
However some non-UK based companies such as PayPal have voluntarily agreed to join the service. So if you do have a dispute with an overseas financial company, it’s still worth checking with the Ombudsman to see if it has the authority to take on your case.
4. The service is free (but only for consumers)
While a lot is made of the fact that the Ombudsman is free for consumers, the same isn’t true for financial companies.
While the Ombudsman offers businesses 25 ‘free’ cases a year, subsequent cases are billed at £750 a pop, regardless of the outcome.
In other words, even if a company wins at the Ombudsman, it will often have to pay a hefty charge for the privilege of using the service.
This, in my opinion, is what makes the Ombudsman such a powerful consumer weapon. The mere mention of going to the Ombudsman may encourage even the most tightfisted of companies to simply pay up.
Financial Ombudsman Service: my experiences
Despite having written this article, I’m almost ashamed to admit that I haven’t needed to use the Ombudsman directly.
That being said, I’m certain the existence of the service did persuade a former travel insurance provider to pay up for a legitimate claim.
It all took place a few years ago when my passport was damaged by rainwater during an overseas trip. As I hadn’t been drinking, nor had I acted unreasonably, I was certain my claim would be approved.
(I did go through the policy small print to make sure I hadn’t inadvertently done something I shouldn’t have!)
My initial claim was turned down,. The insurance company outrageously claimed my passport wasn’t properly in my possession during the time of the incident. I refuted this by adding a follow-up with further details about my claim.
Once again, I was given the cold shoulder.
My next response I upped the ante. I let my provider know that I’d have ‘no hesitation in taking my claim to the financial ombudsman service’ if I was not satisfied with their next reply.
They decided to pay up.
To my mind this was because they knew – as I did – that the Ombudsman fee would be greater than the cost of replacing my passport.
Sticking up for the little guys
When I tell others about my experience, it’s often suggested that I was partly to blame for going with the cheapest travel insurance I could find.
Yet in my view, the existence of the Ombudsman simply means that I don’t have to worry about overpaying for financial products in the future.
If anything goes wrong, the Ombudsman has my back!
Over the years I’ve shared my knowledge of this free service to friends and family. I’ve yet to hear of any negative experiences.
Have any of you used the Financial Ombudsman Service? If so, we’d love to hear your thoughts in the comments section below. You can also check out The Treasurer’s archive of previous articles.
Worth noting that once you have received the final response from the financial institution, you have 6 months in order to submit your complaint to the FOS.
Great reminder about the FOS. The audience of this site may be interested to know there are some real gems on the FOS website. They have a monthly newsletter with advice & reminders on the consumer protection and how this is being applied to current cases.
There is an ombudsman decisions page on their website (top right corner) which is *extremely* helpful, as it gives a very detailed breakdown of the cases that the FOS has taken up, what their outcome has been and the ins & outs of how the FOS came to their decision.
My experience of the FOS however, has been less than stellar. It seems they are under-resourced particularly on the more complex casework and their front line teams have no way of interacting with the case workers at the back end to get a more fruitful update on an individuals case.
Still, it’s providing a valuable service and I’m glad it’s there and for all the hard work they do.
One thing to be aware of is the FOS backlog. They currently expect to assign a case handler after around 4 months.
Are you sure the FOS covers breakdown cover? When I complained to them about the RAC they rejected my compliant, explaining:
“The reason for this is that the part of the policy that you are claiming on “UK breakdown” does not form a contract of insurance and is therefore not a regulated activity, this means that we are unable to investigate your complaint as our rules only allow us to look into activities regulated by the Financial Conduct Authority (FCA).”
I found the Ombudsman service slow and obstructive. I felt that my claim was declined without making any effort to properly read and understand the information provided by me. I took it to an Ombudsman after the initial claim handler rejected the claim and found his response dismissive and potentially discriminatory. For me, it was a huge waste of time and effort which didn’t address the poor financial advice I was given.
I note the writer hasn’t used the FOS. The pro is it’s free and typically, you have nothing to lose by lodging a complaint. It’s true the cost to the firm is material, so it can in theory encourage a resolution. I’ve not once found that it does however- larger firms can’t afford to undermine their complaints process decision by taking that into account. The negatives are the case workers are not lawyers. Their quality is variable. The amount of cases they handle reduces the amount of time they can spend on a matter. It’s largely a paper exercise, rather than a more involved evidential assessment as would happen in a Court. You don’t get to see what submissions and evidence the firm puts forward and the case worker will often reach a view on a disputed point, without seeking your comment. Because they look at “fairness”, they don’t necessarily take account of the law, and I’ve never found they consider the FCA rules, even when cited (they’re not trained). If they get it wrong, unfortunately you’ll not get far. The vast majority of case worker decisions “appealed” to the Ombudsman are rejected. By comparison, the equivalent complaints resolution body for mobile phone and broadband is CISAS. CISAS is free and their matters are handled by external lawyers in legal practice. The quality is higher. It’s much quicker.
The other alternative in some matters would be the County Court. The small claims procedure is not entirely free but it’s dealt with by a Judge. Then there’s the newspaper consumer columns. That can be very powerful and quicker if they take your matter on. So yes try the FOS in appropriate cases but leaving aside their major delays these days, whether you’ll get a caseworker who properly reads and grasps the case before them is unpredictable.
I have engaged the services of FOS after I had a problem with Reassure limited following a transfer of my pension funds from L&G (as did many others from the reports I see online). It is along story but after 9 months of struggling to get a response from Reassure to emails and failure to get through on there their customer helpline I finally turned to FOS. I threatened Reassure that I would use the FOS, but this just provoked the deadlock process.
Now 6 months later I am still waiting for my case to be assigned!
It is nice to know that there is somewhere to turn when dealing with inefficient financial companies, but the lack of speed does not provide any big incentive for them to respond.
The cynic in me says that companies like Reassure know that they may end up with windfalls from accounts that are not claimed or remain unresolved due to their own inefficiencies which should be more reason for FOS to resource up to deal with this type of issue.
I’m in contact with them to get a refund on my Tokyo 2020 Olympics tickets, which both my credit card provider and the Olympics ticket vendors themselves refused to refund. They replied quite quickly saying they didn’t have enough info, and when I gave it, now I’m in a waiting list to be contacted by them about the case.
Have an ongoing case with them, have had two case handlers – one excellent, current one unfortunately appalling and only interested in closing the case rather than the merits of the case. Sadly not convinced FOS is anything more than a talking shop. MCOL/county court system still superior if you have a strong case against a supplier.
I’ve only used the FSO once and feel I need to put some positivity out there for them. Late 2019, I needed to refinance loans with Lloyds as an outcome of a divorce. After agreeing and confirming the rates (Lloyds’s phraseology was a little woolly), 6 months later Lloyds sent paperwork to sign with higher rates.
I complained to Lloyds, a little back and forth, until the Deadlock letter. Progressed to FSO. Provided them with a clear timeline, all the evidence and how I would be adversely afftected by Lloyds changing the agreed rates (approx £80K more interest over the term of the loans). Yes, the delays can be stressful, but the casehandler sided with my view, and Lloyds agreed to honour the original rate. That’s a big thumbs up from me to the FSO. Maybe the non-trivial sums involved influence the quality of FSO response.
For the middle class with time and capacity they can let a case run with the FOS, to see if it will work.
However the system is so cumbersome, and complicated it effectively discriminates against those in society who are struggling, or dont have a computer.
Thanks for all the comments. It’s interesting to hear your views and experiences of using the service.
@David – I always understood that breakdown cover comes under the Financial Ombudsman Service. However, there are reports online that it may depend on whether you have breakdown ‘cover’, or breakdown ‘insurance’. According to Which?, breakdown is covered by the FOS. https://www.which.co.uk/news/2021/10/breakdown-firm-rac-abandoned-us-for-more-than-12-hours-can-i-claim-compensation/
The FOS is also mentioned on the RAC’s complaints web page, though admittedly, they deal with other financial products besides breakdown insurance.
https://www.rac.co.uk/complaints
@Matt – I think it’s relatively well known that the Ombudsman may not be the most efficient of organisations. The BBC did a recent (ish) report on this. Hopefully they’ve improved since! 🙂
https://www.bbc.co.uk/news/business-55858137
The Treasurer.