If you have a problem, if no one else can help you, and if you can find them, maybe you can hire the A-Team...
Though if it's with a financial services company, it's easier to complain to the Financial Ombudsman for free. It can rule, order compensation and even payout for your time on top. This Q&A guide takes you through exactly how to do it.
In this guide
What is the Financial Ombudsman?
The Financial Ombudsman Service (FOS) is an independent official body, established by Parliament in 2001, for settling disputes between UK based financial companies and their customers. The service it provides is completely free.
It has legal power to adjudicate on individuals' complaints or complaints from small businesses and charities with turnover under €2 million (around £1.65 million) and less than 10 employees. Anyone that's ever had a financial product or service needs to know about the powerful rights all consumers have when dealing with financial companies.
Regulations state these companies must "treat customers fairly" and if not the Financial Ombudsman Service is there to provide a free way to fight back. And there's no negative outcome, you cannot be awarded against, the worst that can happen is the Ombudsman says you've no case.
The service is also not just for new complaints. In many circumstances you can complain about something that happened up to six years ago. Plus if you think an old complaint’s been badly dealt with, see the Can I re-open my complaint question.
How does it operate?
While the ombudsman has the power to investigate cases, actually its primary role is in settling disputes between customers and companies, and while these may sound like they're the same thing, actually it can often solve the problem without an investigation.
Within these disputes it is impartial, neither on one side nor the other, yet its job is to ensure that complaints are dealt with and fair play happens. In a nutshell the process works like this (more info on how you complain below):
You fill in a form. If you’ve already complained to your bank and it’s not helped, you simply go to the ombudsman's website or call it up and fill out a standard complaint form, you don't need any legal help at all, it's all pretty straightforward.
It puts your case to the company. At this point it goes to the company and asks what happened and for the company to solve the problem or pay the requested compensation.
Companies can agree. It's quite common once the Ombudsman is involved for a company to just roll over and pay out what they owe at an early stage to avoid a full investigation.
If there's no agreement, it may carry out a formal investigation. The final decision is based on fairness, to try and ensure the customer hasn't been mistreated. It's done, roughly speaking, on the basis of the 'balance of probability' in other words on what it thinks is most likely to have happened from the evidence it is given.
Using the ombudsman is a very powerful technique that in many cases is cheaper and safer than trying to get resolution via the courts. More importantly unlike the courts, which have to rely on whether the company has broken any law, a big advantage of the ombudsman is it also follows the regulators “treating customers fairly” rules. This means making sure you’ve been dealt with appropriately, not just legally.
While you won't get an instant judgment from the FOS, disputes that go all the way can take three to nine months (longer for PPI complaints) , and while there's no guarantee you will win, tens of thousands of people every year do and it means companies must take you seriously.
What can the Ombudsman decide on?
Its range is huge, not just regulated financial activity, but also the general operations of a financial company to see if it's treating you fairly.
If you're not sure put your complaint in and the worst thing that can happen is the ombudsman tells you it can't adjudicate so you've lost the price of a stamp. Here's a quick list of typical things with links to more details:
Historically the big one here has been of course Bank Charge complaints where the Ombudsman has played a big role. Yet anything from incorrect Direct Debits, packaged accounts, disputed tranactions, cheque clearing, Setting Off or delays or mistakes in the administration of an account are included.
The main one here is unfair Credit Card Charges yet it could involve any inappropriate behaviour such as an increase in interest rate without any explanation being given, disputed transactions or failing to pay out Section 75 claims, amongst others.
Debt collection and irresponsible lending
Since Apr 2007 the Ombudsman has been able to look at complaints about debt collection companies and the lending policies of anyone who holds a consumer credit licence, including the growing area of pay day lenders.
The Ombudsman will need to see you have tried to come to an arrangement with the lender but will investigate if you think you've been treated unfairly. Also see the Debt Problems guide for info on how to sort out debts.
Perhaps the biggest category of them all is the dire selling of loan insurance, with possibly ten billion pounds of missold policies out there (see the Missold PPI guide).
Yet over the past few years Car, Home, Travel, Pet, Roadside Assistance, Income protection, Critical Illness and Private Medical have all moved under the Ombudsman's remit. Complaints can be to do with rejected, delayed and unpaid claims or non disclosure of information and more.
When selling you a product, the onus is now (from April 2013) on the insurer to ask you what they need to know to be able to figure out whether the insurance is suitable for you (it used to be that you'd need to tell them everything whether you thought it relevant or not).
So if they reject mis-selling complaints made about these new insurance policies, and they didn't ask you the relevant questions to make sure that you'd be eligible in the event of needing to claim on the policy, then you can take the case to the FOS as a mis-selling claim.
For full information on the April 2013 changes, see the Insurance Law Reform news story.
Although the Ombudsman does not deal with complaints that are solely about the way an investment has performed it can help with many areas to do with with-profits or whole-of-life policies, unit-linked bonds, savings endowments and stockbrokers. Plus it also has jurisdiction on where people have asked or been told they were getting low risk products but were actually sold risky deals.
Mortgages and loans
This covers a vast range of issues not just with lenders but also Mortgage Brokers, including the way lenders have handled Arrears Problems or the affordability of the mortgage/loan when it was first taken out. There is also the once huge issue of Endowment Misselling although time is now running out for this).
A growing number of complaints come from people who feel they have been mistreated by a payday lender. If you've had payments taken unexpectedly from your bank account, don't think the lender properly checked you could afford to repay the loan or it's been harassing you to repay your debt, the Ombudsman can help. See our Payday Loan Alternatives guide for help if you're considering one of these loans.
Pensions & Annuities
Complaints can include being wrongly advised to transfer out of SERPS, the suitability of a pension or administrative matters such as delay. However, ongoing administrative pension problems (involving an employer or trustees, for example) should be referred to the Pensions Advisory Service in the first instance.
Savings & deposit accounts
A less obvious area of complaint but ISA applications that were not processed correctly or on time, what happens to "roll-over" savings bonds when they end or account interest rates not changing in line with base rate changes are examples of savings complaint that are covered.
Here's some success stories to give an idea of what's possible...
A payment due from a pension provider had been posted to my previous address (I'd moved since taking it out) and banked in 2000. The company wasn't able to provide details of the account the cheque was paid into so I opened a complaint with the Financial Ombudsman. It settled in full about 3 weeks later with 10 years interest - a total of £8,219 - and I believe getting the FOS involved made a big difference.
I found the Ombudsman great, yes it takes time but they are very thorough. All in it took over a year but much of the delay was due to Lloyds determination not to pay quite a large insurance claim but the FOS kept me in touch with what was happening and were very professional.
Don't miss out on updates to this guide Get MoneySavingExpert's free, spam-free weekly email full of guides & loopholes
What does it take into account?
Companies must treat customers fairly and reasonably, yet of course that definition is open to question. Unlike a court, the Ombudsman can rule against companies even if they’re acting within the law, as this is not the only source it takes into consideration. Its three sources are:
The law of the land
Of course the primary source is the law, if companies actions are breaking the law then it’s quite clear cut.
Regulators rules and guidance
The Financial Conduct Authority’s (or other relevant regulator) rules also play a key part, so if the FCA has indicated how it wants companies to behave and a company breaks that, it can be deemed unfair.
Good Industry Practice
This is the most interesting one, as it allows the FOS to define good practice.
In most cases it means that the FOS will look at any trade body standards (such as the Lending Code), but it can also look at what is seen as common good practice and what would be reasonable in the circumstances of the case, and if a particular company goes against that, it can deem its actions unfair.
Until 2007 an example was Section 75 claims for overseas purchases. The law says a credit card company is jointly liable with a retailer if something goes wrong, providing the goods were paid for on the card and cost over £100.
Yet there used to be a question over whether this applied to overseas purchases. Although it's now confirmed by the courts this does apply to all lenders, previously most of the big companies paid out anyway. This was then deemed “good practice” meaning that the Ombudsman would take this into account when looking at cases against those that didn’t.
How do I complain to the Financial Ombudsman?
There is a protocol set out here that needs to be followed, yet it's very simple:
- Complain direct to the company
You can't just go to the ombudsman, it will always want to have seen proof that you tried to settle it with the company first.
The important thing to understand is that in many cases a company’s first reaction is to reject your complaint. This doesn’t mean you’ve no case. It's not necessarily about rights and wrongs, it's about commerce. It's cheaper to say no, produce a legalese argument to befuddle you and hope you’ll cower in a corner.
Otherwise expect a reject and don’t be phased by it one jot. To help you remember your rights, we've penned a wee poem to help you remember...
- Complain to the Financial Ombudsman
If your bank won't help, or you wait eight weeks, you can then go to the Ombudsman, unless your bank has sent you a rejection letter suggesting you use the Ombudsman, when it can help sooner.
To start your complaint you just need to contact the Ombudsman and ask it to take on your case. Either do this via the FOS website or call 0800 0234 567 (0300 1239 123 from a mobile). If you're not good at form filling or English isn't your first language, the Ombudsman can take you through the process and/or find an interpreter.
After contacting it, you'll need to fill in and post back a copy of its complaint form to explain your case (attach evidence if you have it) and so that it has a copy of your signature. You then leave the matter to it to resolve and it'll contact you if it needs more information or with any possible resolutions. Remember though...
The essence of the complaint & what remedy you want should be clear and obvious
The form is quite simple to fill in, though do take care. To help we've written a guide, which takes you through filling in the form step by step. It's written in Microsoft Word so you can easily cut and paste sections of it and/or print it out and have it next to you as you're filling in the FOS form.
Although the ombudsman resolves a third of cases within three months, the majority of cases do take longer (on average between six to nine months and even longer for PPI). It is currently receiving a record number of complaints from consumers and the complaints are getting more complex.
How far back can I complain?
The good news is you’ve a right to go back a number of years, so if you think you’ve been hard done in the past, dig out your paperwork and put a complaint in.
Yet the Ombudsman can only help with complaints about companies regulated by the FCA. While this doesn't affect most banks and building societies, some insurance providers, for example, were not regulated until 2005 or 2008. If in doubt check with the Ombudsman.
If covered, the key rule is you’ve EITHER three years from when you knew you could make a complaint OR six years from the event you're complaining about taking place...
You also need to contact the Ombudsman within six months of your last contact with the firm (if it followed the correct process, you may have longer if it didn't). Outside of this timeframe you will need to start your complaint from scratch, and there is a chance the Ombudsman may not be able to help if you need to refer your case to it down the line, so do try not to miss the deadline.
In some cases it’s clear cut
For instance, with Mortgage Endowments, you get a dated red letter when your insurance company knows there will be a shortfall, meaning your mortgage might not be covered by the investment. If you took out the mortgage endowment over six years ago, the 'red letter' will start the three year rule (although for endowments your lender should also have written to tell you about the time limit at least six months before it expired).
If not, use the best option for you
In other cases, this can be a grey area. Let's say you want to complain about your APR getting raised by your credit company. Does the clock start ticking when the rate was altered, when you got your statement or when you knew you could complain about it, which may be months or years later?
If the rate was raised in the last six years you're covered, otherwise you need to be able to reasonably show that you didn't realise there was a problem until three or less years ago, otherwise you’ll be out of time. So as long as it's honest, work this through to your advantage and pick the time when you first realised you could complain about your treatment and you'll be fine. Ultimately the ombudsman will decide if it's in time or not.
Can I re-open my complaint?
Each time you complain, a financial company needs to give you a final response, which must mention the Ombudsman's free service, and it can get in trouble if it doesn't eg in Jan 2011 the then FSA (now called the FCA) fined RBS and Natwest for not telling some of its customers about this, see the MSE News Story.
If you are not given a final response, or it doesn't mention your right to use the Ombudsman within six months of their letter, your timeframes are extended.
In this case you’ve three years from when you knew you could make a complaint OR six years from the event you're complaining about taking place.
If you are still within these timeframes and would like to pick up a complaint where you left off simply contact the Ombudsman and ask it to take on your case. The Complain to the Financial Ombudsman section above includes links to the forms and a free guide, which takes you through filling in the form step by step.
If you're re-opening your complaint we suggest you include any original letters you still have and mention the fact in the ‘any other details’ section on page 3 of the form. Here’s some suggested text to help:
Can I charge for the hassle it's caused?
The Ombudsman awards compensation for material distress and inconvenience in around 25% of the cases it looks at.
Hidden in its compensation guidelines, it states it can make an allowance of around £50 to £100 a day, and not more than £10 per hour, for the time the consumer needed to spend to put things right, so you can charge for your time.
This is great news for anyone who's experienced unfair problems (from inconvenience to issues that cause distress) due to their bank or finance company, as it officially recognises that time spent to rectify the situation is worth something.
Therefore when you do complain to the Ombudsman, if you have spent significant time and hassle going through the process, be sure to include an estimate (or proof if you've got) of the hours spent and ask for compensation according to its guidelines.
You could go one step further though, and use this as a stick to hit an unco-operative company straight away. While it officially only applies for complaints resolved by the ombudsman, when complaining in the first place, do note it with the company and indicate that you will be asking the Ombudsman for compensation, it may help make it settle.
What can I do if I think the Ombudsman is wrong?
The FOS's decision is usually made by an assigned case worker. If you disagree with the result you can ask for a formal decision to be made by one of the actual Ombudsmen at the service. This usually takes several months as it involves a detailed investigation into your case.
Less than one in ten cases end up with an Ombudsman, and of course some are because the finance company has requested it. However after that, there is no further appeal process with the FOS.
After that, while the finance company must accept the Ombudsman's decision, you still have the right to take the company to court. Think carefully about this, while the Ombudsman can decide purely on fairness, a court will only rule based on legal wrongdoing. For imformation on how to make a small claim for up to £10,000, see our guide.
It’s also worth noting, if you feel the Ombudsman hasn’t handled your case correctly, eg there’ve been unnecessary delays, you can refer it to the FOS’s Service Review Team. If that doesn’t resolve it you’ve a right to go to the Independent Assessor, though this is only about quality of service not the actual decision made.