Guide: The Financial Ombudsman
The Financial Ombudsman was set up by Parliament to deal with the kinds of complaints between individual consumers and financial businesses that can’t be resolved between these two parties on their own. It’s a free service that is very much focused on resolving disputes. The Ombudsman doesn’t write the rules that need to be followed by financial businesses and doesn’t fine businesses when the rules are broken – both these areas are covered by the regulator.
What is the Financial Ombudsman for?
90% of people say they have no complaints about the financial businesses that they use on a regular basis, such as banks, insurance companies or finance firms. However, for the remaining 10%, where an issue arises, the Financial Ombudsman can step in to help resolve it.
What kinds of issues does the Financial Ombudsman deal with?
The Ombudsman can help with most complaints that originate from financial products or services that are being provided from – or within – the UK. This includes:
- PPI (payment protection insurance)
- Insurance Mortgages
- Credit cards and store cards
- Loans and credit
- Payday lending and debt collecting
- Savings and investments
- Hire purchase and pawn broking
- Money transfer
- Financial advice
- Stocks, shares, unit trusts and bonds.
In general, for a complaint to be within the Financial Ombudsman’s remit, it must be about a business that is covered (for example, one that is regulated by the Financial Conduct Authority) and an issue that falls within the list above. There are also some strict time limits within which a complaint must be made and the Financial Ombudsman won’t handle complaints that fall outside of these time periods.
There are also a number of complaints that the Financial Ombudsman won’t be able to deal with – for example, it is not always able to handle complaints that are made between one business and another. As each case will be different, it’s recommended that you contact the Financial Ombudsman about a potential complaint to make sure that it is within the remit.
What are the time limits within which a complaint has to be made?
If a complaint is not made within the set time limits then a business is able to object to the Ombudsman looking at the complaint – this is because it is ‘time barred.’ In general, the time limits that apply are: six months from the date that the financial business sent the customer a ‘final response’ to their complaint and six years from the event that has caused the consumer to make the complaint in the first place (or – if later – three years from when the consumer knew, or could reasonably have known, they had cause to complain).
What kind of action can the Financial Ombudsman take?
Where a complaint us upheld the Financial Ombudsman can order a financial business to pay compensation to the consumer. That compensation will be based on loss i.e. the amount of loss that the consumer has suffered as a result of the actions of the financial business. For complaints made before 1 January 2012 the maximum amount of compensation available is £100,000 and for complaints made after that date its £150,000.
Can you complain straight to the Financial Ombudsman?
No. Before you make a complaint to the Financial Ombudsman you must first give the financial business in question the chance to rectify the situation. You should notify the business of the details of your complaint and they will then have eight weeks to try and come to some sort of a solution. If you are not happy to accept the solution that has been offered by the business, if you think they have dealt with your complaint badly, or no solution has been offered, then you can take your complaint to the Financial Ombudsman. You can do this by filling out a complaints form, which is available from the Ombudsman’s website.
How long does it take?
The Financial Ombudsman states very specifically that there is no average length of case for most complaints. It looks in detail at each complaint that is brought to its attention and various factors are taken into account, such as how complex the issues in the case are and how long it takes to get hold of the information that is required to bring the case to a satisfactory conclusion. As a result, some of the complaints can take just a few months to resolve, whilst others go on for much longer.
Are cases ever prioritised?
Yes. Although not all cases can be given special treatment, the Financial Ombudsman will prioritise cases in a number of different situations. For example, where it is clear that the consumer would suffer particular difficulties if there was any delay – for example, the imminent threat of a lender taking possession of a home, a significant or damaging financial loss is about to occur in the near future, or the consumer’s main source of income depends on the outcome of the complaint.
If delay is likely to add to the distress of the consumer, or to have an adverse effect on health then this will also cause priority to be given, for example where the consumer is ill or the outcome of the complaint will decide whether or not serious medical treatment should be received.
Can you complain if you don’t live in the UK?
The remit of the Financial Ombudsman generally covers businesses that provide retail financial products and services from the UK. Whether or not the Financial Ombudsman can assist doesn’t depend on where the complainant is based but on where the business in question is located.
Is the Financial Ombudsman a consumer champion?
No, it is meant to be a completely impartial and independent body that is designed to help resolve complaints by consumers against financial businesses. Its role is to reach a fair and reasonable decision about each case based on the unique facts of that case. However, where there is a complaint that raises an issue that may affect a large number of consumers the Financial Ombudsman can take this to the regulator to action.