Eight-week ombudsman referral wait could be halved under new Government plans - something MSE has long campaigned for
An eight-week wait to refer complaints to ombudsmen and alternative dispute resolution schemes could be halved under new Government proposals. The outdated rule is something MoneySavingExpert.com has campaigned to reduce since 2017.
The plans have been put forward under a consultation on 'Reforming Competition and Consumer Policy' published today (Tuesday 20 July), which runs until 1 October. Within the consultation, the Government said:
- It believes there is a "good case" for halving the eight-week complaints referral threshold in markets where alternative dispute resolution (ADR) is mandatory. It says this is so businesses are incentivised to resolve customer disputes more quickly.
The consultation cited our 'Sharper Teeth' report, which was submitted to Parliament in 2017, stating that it highlighted how the eight-week rule was created in a non-digital age and should be shortened to a minimum of four weeks.
- It accepts our recommendation for a ‘fit and proper’ approved-persons test for people in senior roles at ombudsmen and ADR schemes, as put forward in our 2017 report. The Government said that key personnel at ADR providers, which would include ombudsmen, should be assessed and approved for their suitability to provide the service.
The move comes as part of a wider consultation, which also looks at giving the Competition and Markets Authority (CMA) enhanced powers to tackle consumer rip-offs and bad business practices – and new powers to fine companies breaching the rules up to 10% of their global turnover. See our Government unveils new consumer protections news story for more info.
'If firms behave unfairly it can have a devastating impact on people's finances'
Martin Lewis, founder of MoneySavingExpert.com said: "Finances are about far more than the money in people's pockets. They impact the roofs above their heads, their mental health, relationships and general wellbeing. If firms behave unfairly, it can have a devastating impact, so we need urgent intervention.
“That’s why it's such good news that the Government has listened to one of the key recommendations in our 'Sharper Teeth' report on ombudsmen, where we called to halve the time people have to wait to escalate their complaint. In this digital age, it's simply not good enough to have to wait eight weeks after contacting a firm before you can escalate your issue; your finances could be catastrophically damaged during that time. The reduction – so firms still have a month to sort things out first – seems a fair balance.
“The Government has also accepted our calls to have a ‘fit and proper persons’ test for senior staff at ombudsmen and other alternative dispute resolution providers – people have a right to know that their complaints will be properly and effectively managed. Frankly, this hasn’t happened often enough.
“These are positive steps, though the biggest call we made – that the word ‘ombudsman’ should only be used for a body with statutory powers to hold all firms to account, creating a gold standard in dispute resolution – is still missing from the suggestions."
Ombudsmen play a crucial role but the eight-week wait is too long
Ombudsmen and ADR schemes play a crucial role in consumer protection; they resolve disputes as a final referee between a consumer and a company when they're unable to settle a complaint between themselves. For some, they are a viable, free alternative to court action across a range of services and products – including finance, energy, telecoms, legal services, healthcare and housing.
However, to use an ombudsman or ADR scheme, a consumer must first complain to the firm involved, for example, to their bank. The firm then has eight weeks to handle their case before an ombudsman will consider the complaint. See our Financial Ombudsman – your rights guide for more info.
But MoneySavingExpert.com (MSE) has campaigned for the eight-week wait time to be slashed by at least half for more than four years, and highlighted this in both our 2017 'Sharper Teeth' report and our 2019 Justice Delayed report. The latter report found that 89% of the 2,069 people surveyed said the eight-week rule should at least be halved, while 50% said firms should have no more than 14 days to deal with a complaint.
In its consultation, the Government accepted there was a good case for the eight-week wait to be halved, although it added that where complaints are complex, there may be reason for businesses to have more time in resolving disputes, as long as there had been "constructive engagement" beforehand.
The consultation also supported our recommendation for people in senior ombudsmen roles to be vetted. But the Government didn't back our belief that the word ‘ombudsman’ should only be used for a body with statutory powers that can call all firms to account, to create a gold standard in regulation.
'Eight weeks is simply too long a time to wait'
Commenting on the news, Yvonne Fovargue MP and chair of the All Party Parliamentary Group (APPG) on Consumer Protection - which commissioned MSE's 2017 report, as well as issued its own call for evidence on the ombudsmen landscape in April 2018 and published its final report in January 2019 - said: "It is good to hear that the Government is considering halving the waiting time before a complainant can pass their case to the ombudsman.
"Eight weeks is simply too long a time to wait, especially in the digital age. The introduction of a ‘fit and proper‘ test for ombudsmen is also welcome, if long overdue. Both of these were recommendations in the report of the APPG on Consumer Protection, which I chaired, in January 2019.
"It would be even better if the department for Business, Energy & Industrial Strategy were now to consider some of the other recommendations we made then, including placing all ombudsmen schemes on a statutory footing, with enforceable powers covering all firms in their sectors. It would also be helpful and less confusing for consumers if we had a single portal for all complaints to ombudsmen, regardless of the nature of the complaint."
What does the Government say?
Within the consultation the Government said that "maintaining an upper limit of eight weeks has the potential to harm both consumers and businesses if active steps are not being taken to resolve the complaint".
It added that evidence from a 'Consumer Green Paper' suggested that "protracted disputes can cause consumers stress and financial hardship and may harm businesses too by eroding trust and reducing satisfaction with business complaint handling, affecting customer retention".
You can read the full consultation on the Government's website. It's unclear at this stage when the measures outlined could take force - the Government only said that any legislation would be subject to the parliamentary timetable. For more info on the current protections you get as a consumer, see our Consumer Rights guide.