The recent review of ombudsman procedures, which runs to 50 pages, does not break much new ground.
I welcome the fact that the Financial Services Ombudsman will now refer straight to the FSA any situations where an individual brokerage receives numerous complaints over a particular issue, indicating an underlying problem.
On the face of it, the deck will still be stacked against us.
So what do we think of the ombudsman service? Is there any equity in a system which allows users of financial services to have a case tried by the ombudsman, while we pay the cost of considering the complaint, but which still leaves them the opportunity to go to court if they do not like the decision?
We pay the costs and we must abide by the decision.
The ombudsman service is abused. Amazingly, it is often abused by people who are coerced by high-street brokers to complain against a competitor or a product provider on the basis that many will pay out £350 rather than a case fee of £360 along with the costs and time-consuming work involved with fighting the case.
They assume it is a good start to a relationship to get £350 for a new client.
Perhaps brokers who persuade clients to make spurious claims should sit back and think. They are allowing the knowledge that a £350 claim will be met to proliferate. It could come back and bite them.
It is at this end of the equation where I believe there needs to be some deep thought. At the moment, we can protest that a claim is vexatious or frivolous but, in general, even this can cause more work than just paying the £360.
I have put to the ombudsman the view that we should be able to up the ante. Quite simply, if we believe a claim is vexatious or frivolous (probably prompted by one of our competitors), we ought to say we are not going to pay £360 for this case, we are going to pay £1,000 but the plaintiff must pay £500.
Should the plaintiff win, they get back their £500 and it costs us £1,000. However, should we win, we keep our £1,000 and the ombudsman is more than compensated for its work by getting £140 more than the standard case cost.
Many small investors and purchasers of financial products would protest. However, a very brief questionnaire to the plaintiff regarding their financial status, perhaps with a sworn affidavit, would allow the ombudsman to make an initial decision on whether it was in the industry's interest to allow perhaps a wealthy institution to browbeat a small investor.
There is no doubt the ombudsman's system of broker-pays-all is being abused. Perhaps the level of abuse is small at the moment but it is guaranteed to grow. I make this comment because I would feel unclean if I took the easy option. The parts of the industry which are taking the easy option will rue the day when complaints proliferate. One day they will wish they had fought every dubious case, just like a few of us who never sell out to the £350 soft option.
So, the ruling that the ombudsman is always right when he decides against us but could be wrong when he decides against the plaintiff looks likely to stay. I must say I am probably making a mountain out of a molehill because, in our dealings with the ombudsman, we have yet to find a ruling where we violently disagreed. We have only ever disagreed about the size of compensation. Indeed, those are the only cases we let get to the ombudsman. It is in the area of unreasonableness of our clients where we find the ombudsman very useful.
Finally, could I just praise the Financial Ombudsman Service. In our dealings with it, we have found it to be very fair. Our lack of ability to appeal would be worrying if it was less fair and professional.
Peter Hargreaves is chief executive of Hargreaves Lansdown