By Neil Morrison, Associate, Dispute Resolution
In the current climate, there are huge numbers of dissatisfied consumers making complaints to their banks and financial institutions. Often the banks will complete their internal complaints process and unsurprisingly reject the consumers’ complaints.
Many disputes arise between consumers and their banks/financial institutions that are never acted upon by the consumers. The reasons for the failure to raise court proceedings are usually: the consumer’s reluctance to incur legal fees, financial risk of losing their case, and the stress of litigation.
However both consumers and certain small businesses may complain to the Financial Ombudsman Service (FOS) to obtain compensation without the aforementioned inhibiting factors.
The FOS is an independent government body which was established to settle disputes between companies and their customers. The purpose of the FOS scheme is to resolve certain disputes quickly and formality.
Typically, the disputes that are resolved relate to bank accounts, debt collection and irresponsible lending, insurance, pensions, mortgages and loans, and (notably) the mis-selling of hedge agreements.
Here are ten things we think you should know about the FOS before you complain:
1. The FOS service is completely free and you do not need to have legal representation although some people do seek legal assistance to help them prepare their complaint. Win or lose, you do not need to pay anything.
2. If you are a small business then you are only eligible to complain to the FOS if you meet the following criteria:
1) You have fewer than 10 employees; and
2) You have a turnover which is less than 2 million euros (approximately £1.57 million).
3. You must complain to the bank or financial institution and receive their "final response" letter before you can complain to the FOS. You then only have six months to complain once you have received the bank/financial institution’s final response letter. The FOS complaint must be lodged within 6 years from the date the alleged wrong occurred (this specific FOS complaint time limit applies across the UK).
The final response letter must tell you that you can refer the complaint to the FOS within six months. If the complaint is not made within 6 months, it is unlikely the FOS will be able to consider the complaint.
4. You might expect an Ombudsman would decide your complaint but in the vast majority of complaints, a provisional assessment is made by an FOS Adjudicator and often complaint does not reach the Ombudsman as the complainant accepts the Adjudicator’s decision.
5. You may raise court proceedings at the same time as a complaint to the FOS against the bank or financial institution relating to the same disputed issue. However if the complaint has been, or is subject to court proceedings where a decision has been made by a judge on the merits then the Ombudsman may dismiss your complaint.
6. It is unlikely you will have a public or private hearing as most complaints are resolved without the need for a hearing because usually the Ombudsman will decide the complaint can be decided solely by considering written submissions and documents from both parties.
7. You can ask the Ombudsman to order the bank/financial institution to provide specified information or documents you suspect they may be harbouring if the Ombudsman decides it is necessary for the determination of the complaint. If the bank/financial institution fail to provide the information or documents within the specified period, it is punishable as if it were a contempt of court.
8. The Ombudsman can look beyond the law and the small print when assessing what is fair and reasonable in all the circumstance of the case. The Ombudsman will take into account a number of factors: the relevant law, regulations, regulator’s rules and guidance, and codes of practice.
The Ombudsman is free to reach a reasonable view in making an award even if it differs from the position in Scots or English law.
9. The maximum limit of compensation you can be awarded by the FOS is £150,000.
10. There is no right of appeal from the Ombudsman’s decision. The only way in which an Ombudsman’s decision can be challenged is by raising judicial review proceedings on the grounds the decision was illegal, irrational or procedurally impropriety.
It should also be borne in mind that making a complaint to the FOS does not stop the 5 year clock running from when you suffered your losses (6 years from wrong in England & Wales - 6 years from loss for tort claims). If you wish to prevent your claim being time-barred in court, you will need to raise court proceedings within the 5 year limit from when you suffered loss.
If you require assistance with a complaint to the FOS then we may be able to help you.
For more information, please contact:
Tel: 0131 226 8200
DISCLAIMER: While every effort has been made to ensure the accuracy of this blog post, it is not intended to provide legal advice as individual situations will differ. No recipients of content in this blog post should act or refrain from acting on the basis of the blog post without seeking the appropriate legal advice on the particular facts and circumstances at issue from a qualified solicitor in their jurisdiction. The blog post is for general information only and is not legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. No solicitor-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with a solicitor qualified to practise in your jurisdiction. Should you be interested in seeking our assistance with a legal matter, please contact the Dispute Resolution team on 0131 226 8200.