Financial Ombudsman Service
Ombudsman Services are generally delivered nationally and by a private sector ombudsman scheme.
The Financial Ombudsman Service in the UK was established in 2000 and given statutory powers in 2001 by the Financial Services and Markets Act 2000. The Ombudsman Service was set up by law and to be an independent public body and its job is to resolve disputes between consumers and businesses - fairly, reasonably, quickly and informally. What FOS claims is at the heart of their service is fairness. FOS also boasts that they independently help settle and or resolve complaints some companies refer to them. To be granted assistance by FOS, the company must be signed up to the scheme.
The service that the FOS delivers is free for all consumers, which is great on the face of it, however increasing concerns are being levelled by the legal profession as FOS tends to delay matters unfairly, which obstructs justice and fails to deliver advice and ruling in respect to many cases, which are clearly unfair.
When considering timeshare matters there are very few working the problem and if the statement from their staff are to be believed, there are 6 staff dealing with thousands and thousands of timeshare cases. Some have described FOS and morphing into a well of nothingness and many claims go in but very little comes back out.
In the past there was a respected service however, after the influx of claims surrounding timeshare loans payments on credit cards and other explosive financial misselling scandals, the service appears to be breaking apart at the seams.
FOS claims that 90% of the disputes it handles are resolved and settled early, at informal stages and without the intervention of an Ombudsman, however this is contested by the legal profession. In 2018 a survey was carried out and found that 95% of cases delivered to FOS were not meaningfully settled or discussed despite over 12 months passing by. Accordingly, consumers are in for a quick refusal or a very long wait to receive what they seek to suggest is fairness.
FOS infers that the Ombudsman's decision is the final stage of the Financial Ombudsman Service's process and if a consumer’s complaint accepts a final decision, it is binding on both parties and enforceable in court.
That again all sounds interesting, however after a considerable wait, many will become more anxious, needy for a resolution and an end to the heartache. Therefore, a significant number will be encouraged to kowtow the offer regardless of it derisory nature as the alternative is to embark on another adventure via the courts. Many are asking whether this is fair.
FOS claim that independent commentators generally recommend consumers use their service rather than the courts, as the outcome of court cases can be unexpected, disappointing and costly.
However, there have been judicial reviews against the ombudsman, brought by financial service companies who have to accept the ombudsman's decisions 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.
The difficulty in winning a judicial review is that the Financial Services and Markets Act 2000 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".
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". 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.
If you review the comments of the employees who have now left the employ of FOS you will find overwhelmingly negative reviews (with an average rating of 1.9 out of 5), blaming a decline in quality on recent changes in the way the organisation is structured.
In the years since the ombudsman service was created, 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. 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.
Questions arise as to their impartiality, 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. Though the ombudsman service currently upholds over 49% of complaints in favour of the consumer, there have been complaints that the awards are inadequate.
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. (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 undercover at the FOS 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.