View more on these topics

Watchdog’s not so fierce

There are misconceptions in some quarters as to the way the Financial Ombudsman Service works and how it comes to decisions. I should like to take this opportunity to lay to rest some of these commonly held but mistaken opinions on the way we operate.

“The ombudsman service should be more like the courts and not consider probability.”

When two versions of events exist, the ombudsman service considers, on the balance of probability, what is most likely to have happened. This is exactly the same test applied in the civil courts. Just like the courts, we are entirely impartial – neither a consumer champion nor an industry trade body.

“I see from the local paper that ABC is in court. No smoke without fire…”

There are, of course, differences between the ombudsman service and the courts. We are a confidential service. We do not talk about cases in progress, nor publicise decisions on individual cases. For a small business operating in a close-knit community, it might not be desirable to have a case reported in a local paper as this could cause personal embarrassment and undermine confidence in the professionalism of the individual in the eyes of other clients.

“Familiarity (with financial disputes) breeds …”

Another difference from the courts is that we have the benefit of seeing large number of financial disputes every day. We have specialist teams that deal with IFA cases and are in the unique position of being able to build up a picture of the standard of advice given at a certain point in time.

Our ombudsmen do not sit in detached court rooms, making decisions in isolation. Instead, they meet regularly with ombudsmen who specialise in different areas of finance. Believe it or not, similar issues can arise in a banking dispute as with a critical-illness case. Our ombudsmen work closely with the adjudicators and hold briefings and surgeries to develop areas of interest and ensure consistency of approach.

The ombudsman service also understands the complex inter-relationships between an IFA, their PI insurer and often the PI insurer’s solicitors. We meet regularly with PI insurers and IFA trade bodies to hear what IFAs are saying and the areas that concern them. We want IFAs to engage with us. If you have a concern, raise it directly with us or through a trade body.

We often go to intermediary-focused conferences where we have drop-in surgeries. Could a judge be expected to have this level of background contextual understanding?

Fewer than 5 per cent of firms covered by the ombudsman service paid a case fee last year. The first two complaints each year are free, which benefits IFAs in particular. This means that having a dispute resolved at the ombudsman service is almost certainly going to cost less than the legal costs of going to court.

Could it be for the above reasons that, in our last industry satisfaction research, 90 per cent of firms told us that the financial ombudsman service was a better alternative than going to court?

So, in reality, when faced with a choice, it seems firms do feel it is better the devil you know…

Recommended

Nelson in move to HSBC to run public relations

The Money Portal’s former head of communications Kerry Nelson is joining HSBC Investments UK on October 31 as associate director of external communications. Nelson will be responsible for the group’s public relat- ions strategy and acting as a spokeswoman for its investment business which com- prises fund management, its specialist alpha team, hedge funds, quant, […]

FSA plans to launch mortgage website

The FSA is launching a new mortgage website for consumers – mortgageslaidbare.info – bringing together existing mortgage tools and resources including budget calculators and mortgage tables. The website is launched to coincide with the first anniversary of mortgage regulation. A national and online advertising campaign promoting the web site is to follow.

Resolution launches advice Foundation for low earners

The Resolution Foundation launches today, a not-for-profit organisation targeting basic rate taxpayers with low financial awareness. The initiative will look at developing a new financial advice resource funded through a public/private partnership, designing ways for individuals to make better decisions on housing, credit, savings and pensions to maximise future opportunities and to support other organisations […]

B&B launches guaranteed combi bond

Bradford & Bingley is launching a guranteed combi bond tracking the performance of the stock exchange but not investing in it – so the capital is secure. The new bond is a deposit-based savings account splitting the customer’s investment in half.Half is invested in a one year fixed term bond paying 7.00 per cent gross […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment