Posted on Aug 23, 2012 by | 0 Comments
It has come to our attention recently that certain banks are advising some customers who have complained about interest rate products that they should go down the formal complaints procedure route rather than having their complaint reviewed under the FSA review scheme.
Why are the banks doing this?
If the bank pushes customers down the formal complaints procedure route then if the customers are not satisfied with the bank’s final response to the complaint, they will then require to complain to the Financial Ombudsman Service (FOS).
Why does it matter if the complaint is to the FOS rather than FSA scheme?
Firstly the FSA review scheme’s eligibility criteria is wider than the FOS and there is no ceiling on compensation in the FSA review scheme unlike the FOS which has a £150,000 cap.
Secondly, many customers who have complained to the FOS previously have been unsuccessful as illustrated by FOS Complaint 94/10 where the complaint made against a bank about an interest rate hedging product was not upheld. It is anticipated that customers will have greater prospects of obtaining compensation under the FSA review scheme than the FOS.
Finally, a complaint to the FOS can often take a long time to reach a final decision by an Ombudsman while FSA review decisions are expected within 9 months.
Given these key differences between the schemes, it is hardly surprising that the bank would rather have the customer go down the FOS route than the FSA review scheme.
Customers should be alert to their bank pushing them down the FOS route following their initial complaint notifying the bank they think they have been mis-sold an interest rate hedging product. If a bank suggests their own complaints procedure rather than FSA scheme then the customer should insist upon their complaint being considered under the FSA review scheme on the basis that their complaint relates to an interest rate hedging product which they allege was mis-sold.
If you require further information on interest rate swap agreement mis-selling, the FOS scheme or the FSA review scheme you can contact a solicitor in the dispute resolution team on 0131 226 8200.