Financial Ombudsman – your rights
How to get help & compensation for free
If you have a problem with a regulated financial company that the firm won't resolve, you can complain to the Financial Ombudsman Service. It's a free dispute resolution service, which can order firms to pay you compensation. This guide runs through everything you need to know about how it works and how to submit a complaint.
If you've ever had a financial product or service, you need to know about the powerful rights all consumers have when dealing with financial companies. Regulations state these companies must "treat customers fairly". If they don't, you can go to the Financial Ombudsman Service to take a look at your case and get an independent decision based on the facts.
The Financial Ombudsman Service (FOS) is an official body, established by Parliament. It settles disputes between UK-based regulated financial companies and their customers and has legal power to adjudicate on individuals' complaints. The service is COMPLETELY free to use.
How does it work?
We give you the full rundown below, but in a nutshell, the process works like this:
- You fill in a form. If you've already complained to the company and it's not helped, simply go to the ombudsman's website and fill out a form, or give it a call. You don't need any legal help at all, it's all pretty straightforward.
- It puts your case to the company. Once you've made the complaint, it asks the firm what happened, effectively it asks the company for its side of the story.
- The company may agree. Once the ombudsman gets involved, it's common for companies to just roll over and pay out what they owe to avoid a full investigation.
- If there's no agreement, it may make a legally-binding final decision. The final decision is based on fairness, to try to ensure the customer hasn't been mistreated. Roughly speaking, it's done on the basis of the 'balance of probability' – in other words, what it thinks is most likely to have happened from the evidence it's given.
Using the ombudsman is a very powerful technique. It's cheaper and safer than trying to get a resolution via the courts. More importantly, unlike the courts, which have to rely on whether the company has broken any law, the ombudsman service follows the regulator's 'treating customers fairly' rules. This means it can rule against companies EVEN if they're acting within the law, as this isn't the only thing it takes into consideration.
The three things it'd look at are:
- The law of the land. The primary source is the law. If companies' actions break the law, then it's clear-cut.
- Regulators' rules and guidance. The rules of regulators, including the Financial Conduct Authority (FCA), also play a key part. If the FCA has indicated how it wants firms to behave and a firm breaks that, it can be deemed unfair.
- Good industry practice. This is the most interesting one, as it allows the ombudsman to define what good practice is.
In most cases, it means the ombudsman will look at any trade bodies' standards, such as the Lending Code. But it can also look at what's seen as common good practice and what would be reasonable in the circumstances of the case. If a particular company goes against that, it can deem its actions unfair and put things right for you.
What sort of products/services can you complain about?
Its range is huge. It doesn't just cover regulated financial activity, but how companies operate in general, to ensure you're being treated fairly.
If you're not sure your complaint is covered, or you just want to find out how to get started with your complaint, it's worth a call to the ombudsman - call 0800 0234 567 or 0300 123 9 123 from a mobile. The worst thing that can happen is that the ombudsman tells you it can't adjudicate.
Here are some typical areas the ombudsman deals with:
- Bank accounts. Historically, the big one has been complaints about bank charges, but that is not a big thing now as many banks have stopped applying charges. However, complaints about packaged accounts keep flooding in.
- Credit cards. The main issue's unfair credit card charges. But the ombudsman can also deal with any inappropriate behaviour, such as an unexplained increase in interest rate, disputed transactions, or not paying Section 75 claims.
- Debt collection and irresponsible lending. The ombudsman can look at complaints about debt collection companies as well as the lending policies of anyone that holds a consumer credit licence, including payday lenders.
For example, if you feel a lender is harassing you or not treating you properly according to the FCA Consumer Credit handbook, you can complain. The ombudsman will need to see that you've tried to come to an arrangement with the lender but it'll investigate if you think you've been treated unfairly. Also see the Debt Problems guide for info on how to sort out debts.
- Payment protection insurance (PPI) and other insurance. A big category of complaints used to be related to the dire selling of PPI. Car, home, travel, and pet policies, roadside assistance, income protection, critical illness and private medical insurance are all also under the ombudsman's remit. Complaints can be about rejected, delayed and unpaid claims, non-disclosure of information and more.
When a firm sells you an insurance product, since April 2013 the onus has been on the insurer to ask you what it needs to know so it can figure out whether the policy's suitable for you (before then, you were expected to volunteer this information yourself).
So, if the insurer rejects your complaint, and it didn't ask you the vital questions that would determine if you were eligible to claim, you can take it to the ombudsman as a mis-selling claim.
- Investments. The ombudsman doesn't deal with complaints that are solely about the way an investment has performed. But it can help with many areas to do with with-profits or whole-of-life policies, unit-linked bonds, savings endowments and stockbrokers. It also covers where people are told they're getting low-risk products, but are actually sold risky deals.
- Mortgages and loans. This covers a vast range of issues, not just with lenders, but also with mortgage brokers. It includes the way lenders handle mortgage arrears problems, or whether a mortgage or loan was affordable when it was first taken out.
- Payday loans. Did you get a payday loan that you couldn't afford to repay as the lender didn't check your finances properly, or kept trying to sell you it again and again? If so, you may be able to reclaim £100s or even £1,000s - the ombudsman can help.
- Pensions and annuities. Complaints can be about the suitability of a pension plan or administrative matters such as delays, though if you have administrative problems (involving an employer or trustees, for example), you should go to the Pensions Advisory Service first.
- Savings. The ombudsman can look at ISA applications that aren't processed correctly or on time, what happens to "rollover" savings bonds when they end, or other administrative errors.
To show you what's possible, here are some success stories:
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 three weeks later with 10 years' interest – a total of £8,219 – and I believe getting the ombudsman involved made a big difference.
I found the ombudsman great. Yes, it takes time, but it's very thorough. It took over a year, but much of the delay was due to Lloyds' determination not to pay quite a large insurance claim. The ombudsman kept me in touch with what was happening and was very professional.
First, ALWAYS complain directly to the company
You can't just go to the ombudsman. It'll always want to have seen proof that you tried to settle your dispute with the company first.
In many cases, a company's first reaction will be 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 for a business to say no, produce a legalese argument to befuddle you, and hope you'll cower in a corner.
So expect a rejection 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...
Then complain to the ombudsman
- The financial company won't help.
- You have waited eight weeks and still haven't heard back.
- Your bank has sent you a rejection letter suggesting you use the ombudsman.
You can either fill in the complaint form online or print out a copy and post it back to explain your case. Attach any evidence if you have it (this could be statements detailing charges, or your correspondence with the lender). Then leave it with the ombudsman. It'll contact you if it needs more information or has any possible resolutions.
FOS form-filling help
The form's simple to fill in, but take care doing it. We've written a guide to help, which takes you through filling it in, 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 form (Struggling to open the form-filling help? Here are some tips.).
How long will it take to get a decision from the ombudsman?
You won't get an instant judgment from the ombudsman. Disputes that go all the way can take three to nine months, and longer for PPI complaints. While there's no guarantee you'll win, 10,000s of people every year do. It means companies must take you seriously.
Vulnerable customer? If so, you'll get priority
Though the ombudsman can take several months to resolve some disputes, it does try to resolve complaints from vulnerable customers as a matter of priority.
You might have poor health, had an unexpected life event, or caring responsibilities.
If you believe your complaint is urgent and you have a vulnerability, then let the ombudsman know this when you escalate your complaint to it – as this may speed the arbitration process along.
The Financial Ombudsman Service'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.
Fewer than one in 10 cases end up with an ombudsman, and some of those are there because the finance company has requested it. After the ombudsman's decision, there is no further appeal process.
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 information on how to make a small claim for up to £10,000, see our Small Claims Court guide.
If you feel the ombudsman hasn't handled your case correctly – perhaps there were unnecessary delays – you can make a complaint about the service provided. If that doesn't resolve it, you've a right to go to the independent assessor. But this can only be about be quality of service you've had, not about the ombudsman's actual decision.
The good news is you've a right to go back quite a few years, so if you think you've been hard done by in the past, dig out your paperwork and put a complaint in.
The ombudsman can only help with complaints about companies regulated by the Financial Conduct Authority, however. 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 the firm is subject to the FOS, 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 (remember, you need to have complained to the firm first). Outside this timeframe, you'll need to start your complaint from scratch, which means it's back to the offending company.
But, in this latter case, there's a chance the ombudsman may not be able to help if you need to refer your case to it later on, so try not to miss the deadline.
Each time you complain, a financial company needs to give you a final response. This response must mention the ombudsman's free service, and it can get in trouble if it doesn't.
If you don't get a final response, or it doesn't mention your right to use the ombudsman within six months of its 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. The Ombudsman has a helpful page outlining the timescales you can expect/
If you're 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 to filling them in.
If you're re-opening your complaint, we suggest you include any original letters you still have, and mention that fact in the 'any other details' section on page three of the form. Here's some suggested text to help:
I am re-opening this complaint due to not receiving full and correct details of my right to use the ombudsman service following my original complaint in ENTER DATE.
The ombudsman awards compensation for material distress and inconvenience in about a quarter of the cases it looks at.
You can charge for your time. Hidden in its compensation guidelines, it states it will award compensation for the time you've spent resolving your complaint. However it won't usually award this as an hourly or daily rate. Instead it will take into account the overall impact the time spent has had on you.
This is great news if you've unfairly experienced problems due to your bank or finance company, as the ombudsman officially recognises the time you spend rectifying the issue is worth something.
So when you do complain to the ombudsman, if you've spent significant time and hassle going through the process, be sure to include an estimate (or if you've got it, proof) of the hours you've spent chasing the issue, and ask for compensation according to its guidelines. You won't always get it – but you're much more likely to if you ask for it.
You could go one step further and use this as a stick to hit an unhelpful company straight away. The compensation guidelines only officially apply for complaints resolved by the ombudsman. But when you complain to the company, indicate you'll be asking the ombudsman for compensation. It may help make it settle.
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