The Financial Ombudsman Service (FOS) sorts out individual problems arising between consumers and businesses providing financial services. It was set up by Parliament under the Financial Services and Markets Act 2000 to provide help to consumers if something goes wrong. For example, if a financial services business and a customer can't resolve a complaint, the FOS investigates and gives an unbiased answer about what's happened.
It's important to note that the FOS doesn't regulate businesses, as this is the responsibility of the Financial Conduct Authority (FCA). The FOS looks into individual complaints and passes on information to the FCA to decide if further action is required. Individual consumers are advised to complain to the business first, which must respond within 8 weeks. If a business doesn't respond within 8 weeks, or the consumer is unhappy with what they say, the FOS will look into the complaint.
What does the Financial Ombudsman Service do?
Ombudsmen schemes tend to cover a particular industry or sector, including private companies and public or governmental organisations. The FOS focus on cases where a consumer has suffered personal injustice, hardship or financial loss because of the action or lack of action of a financial services provider. For example, the FOS is relevant to you if you have a complaint regarding banking, mortgages, pensions, savings and investments, credit cards or loans.
The FOS is responsible for investigating complaints if the company in question has either failed to address the problem or taken inadequate measures to resolve it. This investigation usually involves gathering and evaluating the evidence provided by both sides. Once they have reached a decision, they will write to you and the company with details of the 'award'.
A 'money award' is where the ombudsman asks a business to pay a particular amount of money as compensation to the consumer. This amount is either specified by the FOS or calculated by the business using instructions provided by the ombudsman. A business could be told to pay up to £150,000, and the FOS can recommend that they pay more if necessary. It's important to note that this 'recommendation' is not legally binding, however, as the ombudsman only has the authority to impose £150,000 worth of monetary compensation. Alternatively, the FOS might tell a business to take particular steps to resolve the problem. This is called a 'direction', which doesn't necessarily involve a financial penalty.
How do I complain to the Financial Ombudsman Service?
If you have a complaint against a financial services provider, you must pursue the internal complaints process of the company before you contact the FOS. If the company refuses to address and resolve your problem, you should ask for a 'final response'. This document is used as evidence that you've done all you can to resolve the complaint before involving the FOS. If businesses do not respond to this request within 14 days, you can go to the FOS. If you do receive the final response letter, you have six months to contact the FOS. In some cases, businesses might fail to respond to your initial complaint. In these situations, you must allow the company 8 weeks to make contact before you forward the complaint on to the FOS.
Getting in touch with the FOS means using their complaint form on the website, which can be sent by post or electronically. However, the FOS also offer a telephone service if you'd prefer to discuss the problem over the phone. When explaining your situation, you won't need concrete proof, but you will need to be clear and concise in your explanation.
An Ombudsman's Final Decision
Parliament granted the FOS the power to tell businesses what they have to do to resolve issues with consumers who have valid complaints. If the consumer accepts this final decision before the deadline, the decision becomes legally binding. This means that business is legally obligated to comply with FOS's final decision. However, if the consumer doesn't accept the decision, it won't be binding on either side. In these situations, the individual may wish to go to court instead.
It is in a business' best interest to comply with final decisions quickly, as it's against the law to refuse. The FOS might contact the FCA, who can impose fines, remove authorisation or even launch criminal prosecutions. Parliament has made ombudsman decisions legally enforceable in court, which means that consumers have legal support if the business fails to comply with the final decision.