MSE calls for urgent reform to ombudsman ‘farce’

Martin Lewis says “there are too many ombudsmen with too few powers”

- MSE report commissioned by All-Party Parliamentary Group (APPG) on Consumer Protection

- Recommends all ombudsmen have statutory powers and ineffective ones stripped of title

- Martin Lewis says “there are too many ombudsmen with too few powers”

Today, the UK’s biggest consumer website MoneySavingExpert.com is calling for a significant overhaul of the UK’s complex maze of ombudsmen in its report “Sharper teeth: the consumer need for ombudsman reform”. The report is being presented this morning to the All-Party Parliamentary Group (APPG) on Consumer Protection, which formally commissioned the research in February.

The report has found the ombudsman landscape to be too confusing and unequal, and that ombudsman failures are leaving consumers feeling frustrated, out-of-pocket and that the whole process is a complete waste of time. Ombudsman powers are completely inconsistent, with varying standards for membership, authority and ability to enforce decisions. This “devalues” the meaning of the term ‘ombudsman’. It begs the question, according to the site’s founder Martin Lewis, “when is an ombudsman not an ombudsman?”

Among its recommendations, the report calls for relevant bodies(1) to impose ‘gold standard’ criteria for ombudsmen, including statutory powers, better performance and a shorter escalation time(2). It’s essential that the complaints procedure is easy, fast and fair. The report asks ineffective ombudsmen to “be stripped of the right to use the word in their title.”

MSE carried out extensive research in the publication of this report, including an online survey(3) of consumers who have used an ombudsman(4).

- On average(5), 60% thought the ombudsman was biased against them; 8% thought it was biased towards them and only 31% said it was neutral.

- Bar one ombudsman (the Energy Ombudsman), more than 50% of respondents said that the decision was unfair.

- 53% were put off using an ombudsman again, even a different one.

Martin Lewis, founder of MoneySavingExpert.com said: “Ombudsman should be the gold-standard in resolving disputes. Yet the brand has been tarnished. There are too many ombudsmen with too few powers.

“All companies in a sector should automatically have to respond to the ombudsman when there is an inquiry and then comply with the ombudsman’s decision. At the moment, with most ombudsmen that simply doesn’t happen – they don’t have the power. We need ombudsmen that are set up or underpinned by statute for this to happen.

“The fact that we’ve allowed too many to use the title ‘ombudsman’ has been hugely detrimental. The weak ombudsmen have knocked the faith in the stronger ones – meaning many people have been put off going to ombudsmen as a matter of recourse.

“Substantial reform needs to happen in the sector in order to give consumers confidence that when they hear the word ombudsman, it’s somewhere they can go to get a fair hearing and to make sure that companies comply.”

The APPG is expected to use MSE’s report to inform its own inquiry into the effectiveness of ombudsmen.

Yvonne Fovargue MP, chair of the APPG on Consumer Protection, said: “We need to ensure that the word ‘Ombudsman’ has real meaning to the public. Consumers will only have confidence in the impartiality of the system if we get rid of industry-run, voluntary ombudsmen and concentrate more on a smaller number of independent, statutory bodies with real bite.”

Examples of consumer views of ombudsmen

While some of those surveyed were positive about their case, others were left unsatisfied with the process or decision. The research shows stark discrepancies from ombudsman to ombudsman, and even within the same service.

Financial Ombudsman Service: “Financial Ombudsman Service was faultless and fast for me with a Section 75 claim that was being “sidestepped” by the provider. Letter from Financial Ombudsman and settled in 72 hours job done.” – Steve via Facebook.

“We used the Financial Ombudsman. Very quick response and prompted the other party into action and ultimately resolving a 2 year dispute [...] Just getting the Ombudsman involved was a trigger enough.” – via MSE survey.

The Pensions Ombudsman: “No evidence that they understood the issue being raised and heavy bias in favour of the administrators who repeatedly provided poor, incorrect benefit information leading to financial loss for me.” – via MSE survey.

Energy Ombudsman: “Energy Ombudsman dealing with [my] complaint. Due to high number of complaints they are dealing with for this company the ombudsman was very lenient with [it]. Extended [its] response time 3 times so I waited months for a response. Left me wondering why I bothered using the ombudsman at all.” – via MSE survey.

Ombudsman Services: Communications: “Uploading documents on Communications Ombudsman site not the easiest. Great service though: exceedingly helpful” – via MSE survey.

“Excellent service – got answers and action [from my supplier] when I couldn’t. Reduced my stress considerably.” – via MSE survey.

Comments about ombudsmen in unregulated sectors highlighted that they are sometimes powerless to enforce decisions, particularly where membership is not compulsory.

The Retail Ombudsman was useless, as the company… had not signed up to the scheme, therefore the Ombudsman could do nothing...” – via MSE survey.

"The Motor Ombudsman ruled in my favour […] still waiting for the garage to accept the ruling. They are given 10 days in which to respond but they are still in talks with the ombudsman. The garage owe me over £10k in damages." – Emily via MSE survey.

"Consumer Ombudsman is totally ineffective. They will only consider applications where the companies are registered with them yet there are very few of these. Their website states they will contact companies who are not registered with them to see whether they will work with the Ombudsman service to resolve complaints but in my case they didn't without any explanation as to why. In my experience they are utterly useless and ineffective and not fit for purpose." – Derek via MSE survey.

-ends-

Notes to editors

(1) Relevant Government Departments, the Ombudsman Association and Companies House.

(2) Generally consumers have to wait 8 weeks to go to an ombudsman, which is far too long according to the report.

o If the complaint is about debt issues, payday loans, credit brokers or black marks on credit files, then waiting 8 weeks could leave consumers in crisis.

o The 8-week rule was created in a non-digital age. But in this digital age with instant credit scoring and decisions, 8 weeks is simply too long. That time should be reduced to somewhere between 2-4 weeks – as a blanket rule across all ombudsmen.

o There should also be exceptions so people who are in crisis due to an unresolved complaint can escalate to an ombudsman sooner.

(3) Online survey conducted between 22 August and 11 September 2017. 1,409 responses were recorded. Consumers were asked about their experiences with various ombudsmen that deal with consumer complaints.

(4) MoneySavingExpert.com is the leading consumer website in the UK. As such, the report focuses on ombudsmen that the public can use as consumers. It does not attempt to include ombudsmen that deal with other types of complaints, such as the Prisons and Probation Ombudsman.

Ombudsmen in the report:

• Financial Ombudsman Service

• Legal Ombudsman

• Local Government and Social Care Ombudsman (LGSCO)

• Parliamentary and Health Service Ombudsman (PHSO)

• Pensions Ombudsman

• Housing Ombudsman Service

• Ombudsman Services: The Energy Ombudsman (Energy Ombudsman)

• Ombudsman Services: Communications

• The Property Ombudsman

• The Furniture Ombudsman

• The Retail Ombudsman/ RetailADR

• The Motor Ombudsman

• Ombudsman Services: the Consumer Ombudsman (Consumer Ombudsman)

• Removals Ombudsman

(5) To calculate these figures the averages for all Ombudsmen used in the results were given equal weighting. Percentages have been rounded to whole numbers.

For more comments, please contact:

Katie Watts

Tel: 020 3846 2631

Mob: 07875 415 378
katie.watts@moneysavingexpert.com

About Martin Lewis: Martin Lewis OBE, Money Saving Expert, is the journalist and consumer campaigner who created MoneySavingExpert.com and is now the site’s Executive Chair. Martin also founded and chairs the Money and Mental Health Policy Institute charity.

He’s the UK’s most-googled man, Citizens Advice’s Consumer Champion of the Year, and has spearheaded major financial justice campaigns including bank charges reclaiming (over seven million template letters downloaded), PPI reclaiming (over six million) and a successful large-scale campaign to get financial education in schools. He has his own prime-time ITV programme, The Martin Lewis Money Show, as well as a range of other regular media slots. He was appointed OBE in the Queen’s Birthday Honours in June 2014.

About MoneySavingExpert.com: MoneySavingExpert.com is dedicated to cutting consumers’ bills and fighting their corner. The free-to-use consumer finance help resource aims to show people how to save money on anything and everything, and campaigns for financial justice. It was set up in 2003 for just £100, and its free-to-use, ethical stance quickly made it the UK’s biggest independent money website, according to internet ranking site Alexa.com, and the number one ‘Business and Finance – Business Information’ site, according to Hitwise. It has more than 12 million people opted-in to receive the weekly MSE’s Money Tips email, and more than 16 million unique monthly site users who visit more than 28 million times a month. In September 2012, it joined the MoneySupermarket.com Group PLC.