The Financial Ombudsman Service wants YOU

Part one

By Adam Bernstein |

Published:  27 February, 2020

The FOS offers help to businesses who are having difficulties dealing with financial issues, and it is free to use. Read on to find out more

Hacked off with the bank over-charges? Angered by an insurers refusal to pay a claim? Felt Shanghaied into taking a commercial loan? What about a merchant acquirer levying new charges that seem unfair?
These are all matters for a well-established but not necessarily that well known government body, the Financial Ombudsman Service (FOS). With new powers granted since 1 April 2019, the FOS could well be a firm’s route to fighting big financial institutions – at no cost.
The FOS is a free service, set up by Parliament through the Financial Services and Markets Act 2000 (as amended) to deal with complaints against any financial organisation. Costs are borne by the financial services sector out of levies collected by the Financial Conduct Authority and case fees.
It’s these case fees that make the FOS interesting because depending on the claim, an institution may settle a case that it might not win rather than dig its heels in unnecessarily. This is because as it presently stands, each institution is permitted 25 investigations a year without charge. Beyond that they pay £550 per case, added to which will be its own internal costs and time in dealing with the case; the fee is chargeable by the FOS whether the institution wins or loses. There are severe regulatory consequences for any firm that threatens to penalise a complainant for exercising their legal right to take a case to the FOS.
Primarily aimed at helping the individual, the FOS has been able to help certain businesses and charities. However, since 1 April 2019 more firms came under its protection. Now assistance can be given to firms with £6.5m turnover (previously £1m), that have less than 50 staff (previously less than 10) and have a balance sheet of less than £5m - previously less than €2m (yes, euros).
As the FOS website points out, it can resolve complaints about most financial products and services including debt collection and repayment, mortgages, pensions and investments, PPI insurance, bank accounts, payments, cards, loans and credit.

The process
Before the FOS can step in, a complainant has to give the institution an opportunity to investigate and where appropriate, fix the problem. This means making contact, outlining in simple terms what the issue is and what is required to make amends.
The institution then has eight weeks to respond with an offer to fix, or alternatively, a ‘deadlock’ letter where it denies the claim. From that point on the FOS can intervene.
However, and this is important, there are strict time limits placed on the FOS’s investigations: It cannot examine matters that happened more than six years prior to the claim, or which happened more than three years from when the matter first arose (or the matter should have been noticed). Further, the FOS cannot investigate matters where the complaint is made more than six months after the deadlock letter has been issued.
It’s worth pointing out that the FOS can investigate matters relating to someone that has died, but it will need to see proof of authority to act – a copy of a Will or a grant of probate for example. It can also investigate any firm in the UK (but not one based in the Isle of man or Channel Islands), even if the complainant lives overseas. It’s just as noteworthy that some overseas firms – PayPal is an example – have asked to be covered by the FOS.
The online process guides a complainant when making contact, but it’s expected that information supplied will include an overview of the problem, details of the institution at fault, supporting evidence, and what is needed to deal with the matter.
The FOS reckons that 90% of complaints are dealt with by its first level investigators. However, hearings can be held if the investigator cannot decide the case and more information is needed. Alternatively, either side can request a hearing, explaining the points that they would like to make when making the request. During the hearing the Ombudsman summarises the case, lets each side make its case, asks questions and allows each side to ask questions of the other. Legal representation is not encouraged.

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