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Disgusted consumers turn on complaints watchdog - Times Online
Disgusted consumers turn on ‘shoddy’ complaints watchdog
Financial ombudsman comes under fire as insider reveals litany of bad practices
Customers with grievances about their bank are being let down by a poorly trained and slapdash ombudsman, according to a whistleblower who used to work at the service.
The Financial Ombudsman Service (FOS), the independent body that settles disputes between banks and customers, lacks the expertise and resources to investigate complaints properly, the former employee alleges. Other critics, including independent financial advisers and lawyers, also accuse the ombudsman of bias in favour of the banks.
The FOS handles 170,000 cases every year and is the last hope for desperate consumers battling with the financial services industry.
Jane Sanders worked as an adjudicator at the FOS between 2006 and 2008, on £22,000 a year, and was “absolutely disgusted” at how the service is run. She says: “If adjudicators don’t meet their targets, they don’t get their bonus, so, of course, cases are going to be rushed through. My target was to close 3.5 cases every week.
“Adjudicators don’t have enough time to trawl through the individual circumstances of each case. Instead, generic template letters are used to speed up the process.” Ms Sanders adds that adjudicators receive little training apart from a one-day induction course and that many are ill equipped to handle complex cases.
The FOS says that it upholds six out of ten complaints from consumers, but it has a huge backlog of cases waiting to be investigated and people can wait nine months or more for a decision. The service has been overwhelmed with complaints about payment protection insurance and bank charges.
Ryah Snipe, 23, a Times Money reader, from Reading, is battling for a fair decision from the FOS after she became a victim of fraud last year. Her Abbey debit card was stolen and her PIN was used to withdraw £7,355, making her overdrawn. She was at work when the transactions took place. However, Abbey said that she must have given her PIN to someone else and, therefore, she must repay the money.
Ms Snipe says: “Abbey is now sending threatening letters saying that it is going to blacken my credit rating unless I pay back all of the money with interest and fees within seven days. The stress is making me ill. I have never written down my PIN or told the number to anyone.”
Abbey told Times Money: “We cannot accept responsibility for money that goes missing from a customer’s account through their negligence.”
Ms Snipe took her case to the FOS, but was disappointed with the service and has asked for her case to be reviewed. “After several months the FOS concluded that I must have been in collusion with the thief, as it says there is insufficient evidence to decide otherwise. The report was poorly written and strewn with errors. I can see no evidence that they have assessed the case properly.”
Stephen Mason, a barrister specialising in electronic signatures, agrees that the FOS does not seem to have considered properly Ms Snipe’s evidence. It has also failed to take into account article 60 of the new Payment Services Regulations, which came into force on November 1. The new rules put the onus on a bank to prove that a transaction is fraudulent.
Mr Mason says: “The FOS seems to agree with the banks that any transaction verified with a PIN cannot be fraudulent. This is incorrect. There are many ways that thieves can obtain a PIN. If Ms Snipe has clear evidence and witnesses that she did not carry out these transactions and she was not negligent with her PIN, then the bank’s assertions cannot be right, and she should have her money refunded immediately.”
Lord Hunt of Wirral conducted a review of the financial ombudsman last year. His main criticism after six months of investigation was that the organisation was a “middle-class service for middle-class people”. Citizens Advice, the charity, says that it always encourages consumers to take their complaints to the FOS and that the service has made real progress in reaching out to more vulnerable groups.
However, Ross Anderson, a professor of security engineering at the University of Cambridge, says that the Hunt review did not go far enough. He submitted evidence criticising the “unacceptably poor decision-making” at the ombudsman, citing examples similar to Ms Snipe’s case.
Professor Anderson told Times Money: “Our evidence was ignored. It turned out that Lord Hunt’s review wasn’t ‘independent’ in anything but name. He was appointed by the FOS board and supplied with their staff.”
It is not just fraud where the ombudsman appears not to have the expertise to deal with cases. Dennis Hall, of Yellow Tail Financial Planning, an independent financial adviser, has taken several complaints to the service involving investments or pensions on behalf of his clients. He says: “The ombudsman does not always have the technical knowledge to investigate cases properly; we had to explain to it the difference between initial charges and establishment charges, for example. There is also very little accountability and transparency, so it can be hard to see how the service reaches its decision.”
A spokesman for the ombudsman blamed the banks’ jargon for misunderstandings among adjudicators. He says: “Our work would be much easier if businesses dealt with us and their customers in plain English.”
Paul Grenet, 68, became so disillusioned with the FOS after he complained about Lloyds TSB that he set up a website, Problems with FOS decisions. Mr Grenet’s 86-year-old aunt was persuaded by Lloyds to invest almost her entire life savings, £126,000, in risky investments, which lost more than £30,000.
Lloyds offered £18,150 in compensation for mis-selling the investment, but Mr Grenet felt this was not enough, so he took his case to the FOS. “The adjudicator and ombudsman ruled that Lloyds TSB’s offer was fair and reasonable, and approved the payout. It later emerged, through my own calculations, that Lloyds had, in fact, deducted too much tax and had not followed the ombudsman’s guidelines when calculating interest on the payout.
“However, I could never get the ombudsman to admit that it approved Lloyds’ incorrect calculations,” Mr Grenet says.
The ombudsman says that it prefers to hear from consumers “in their own words”, without the help of an adviser. In contrast, banks have teams of trained staff to prepare a case and Mr Hall says that the adjudicators even appear “cosy” with bank staff.
The service has 700 adjudicators, who investigate the majority of complaints. If a consumer is unhappy with an adjudicator’s decision, there are 40 ombudsmen who will review the case to reach a “final and binding” decision. If the consumer is still not happy, the only option is to take the bank to a small claims court, which can be expensive and time consuming.
An FOS spokesman says that more than 50 per cent of adjudicators are law graduates, but admits that there are no minimum qualifications for the job. He adds: “It’s important that we deal with our workload professionally and efficiently. This means setting targets and keeping to them.
“We resolve a third of cases within three months, but if consumers prefer a more detailed, and lengthy, investigation they are always able to ask for a full review and decision by an ombudsman.”
Case study: forced to seek redress in the courts
Emma Woolf, 28, lost almost £10,000 after her Abbey business account was hijacked by fraudsters. The bank refused to compensate her and she took her case to the Financial Ombudsman Service.
However, after seven months she gave up hope of receiving a fair decision and is taking Abbey to court.
Ms Woolf was horrified to discover in March that fraudsters had been draining her funds for three months, mainly by making withdrawals at cash machines of up to £500. Abbey said it would not refund the money because the correct PIN had been used and the withdrawals were made near Ms Woolf’s home in Mill Hill, northwest London. However, she kept her card locked securely in a safe and has never written down the PIN or told the number to anyone. She was out of London when several of the cash withdrawals were made.
She says: “All the fraudulent transactions do not have any reference numbers, which is very suspicious. We have so far spent £3,000 in solicitors fees and my business is unable to trade because I have lost so much money to the fraudsters.”
Abbey refused to comment.
Disgusted consumers turn on ‘shoddy’ complaints watchdog
Financial ombudsman comes under fire as insider reveals litany of bad practices
Customers with grievances about their bank are being let down by a poorly trained and slapdash ombudsman, according to a whistleblower who used to work at the service.
The Financial Ombudsman Service (FOS), the independent body that settles disputes between banks and customers, lacks the expertise and resources to investigate complaints properly, the former employee alleges. Other critics, including independent financial advisers and lawyers, also accuse the ombudsman of bias in favour of the banks.
The FOS handles 170,000 cases every year and is the last hope for desperate consumers battling with the financial services industry.
Jane Sanders worked as an adjudicator at the FOS between 2006 and 2008, on £22,000 a year, and was “absolutely disgusted” at how the service is run. She says: “If adjudicators don’t meet their targets, they don’t get their bonus, so, of course, cases are going to be rushed through. My target was to close 3.5 cases every week.
“Adjudicators don’t have enough time to trawl through the individual circumstances of each case. Instead, generic template letters are used to speed up the process.” Ms Sanders adds that adjudicators receive little training apart from a one-day induction course and that many are ill equipped to handle complex cases.
The FOS says that it upholds six out of ten complaints from consumers, but it has a huge backlog of cases waiting to be investigated and people can wait nine months or more for a decision. The service has been overwhelmed with complaints about payment protection insurance and bank charges.
Ryah Snipe, 23, a Times Money reader, from Reading, is battling for a fair decision from the FOS after she became a victim of fraud last year. Her Abbey debit card was stolen and her PIN was used to withdraw £7,355, making her overdrawn. She was at work when the transactions took place. However, Abbey said that she must have given her PIN to someone else and, therefore, she must repay the money.
Ms Snipe says: “Abbey is now sending threatening letters saying that it is going to blacken my credit rating unless I pay back all of the money with interest and fees within seven days. The stress is making me ill. I have never written down my PIN or told the number to anyone.”
Abbey told Times Money: “We cannot accept responsibility for money that goes missing from a customer’s account through their negligence.”
Ms Snipe took her case to the FOS, but was disappointed with the service and has asked for her case to be reviewed. “After several months the FOS concluded that I must have been in collusion with the thief, as it says there is insufficient evidence to decide otherwise. The report was poorly written and strewn with errors. I can see no evidence that they have assessed the case properly.”
Stephen Mason, a barrister specialising in electronic signatures, agrees that the FOS does not seem to have considered properly Ms Snipe’s evidence. It has also failed to take into account article 60 of the new Payment Services Regulations, which came into force on November 1. The new rules put the onus on a bank to prove that a transaction is fraudulent.
Mr Mason says: “The FOS seems to agree with the banks that any transaction verified with a PIN cannot be fraudulent. This is incorrect. There are many ways that thieves can obtain a PIN. If Ms Snipe has clear evidence and witnesses that she did not carry out these transactions and she was not negligent with her PIN, then the bank’s assertions cannot be right, and she should have her money refunded immediately.”
Lord Hunt of Wirral conducted a review of the financial ombudsman last year. His main criticism after six months of investigation was that the organisation was a “middle-class service for middle-class people”. Citizens Advice, the charity, says that it always encourages consumers to take their complaints to the FOS and that the service has made real progress in reaching out to more vulnerable groups.
However, Ross Anderson, a professor of security engineering at the University of Cambridge, says that the Hunt review did not go far enough. He submitted evidence criticising the “unacceptably poor decision-making” at the ombudsman, citing examples similar to Ms Snipe’s case.
Professor Anderson told Times Money: “Our evidence was ignored. It turned out that Lord Hunt’s review wasn’t ‘independent’ in anything but name. He was appointed by the FOS board and supplied with their staff.”
It is not just fraud where the ombudsman appears not to have the expertise to deal with cases. Dennis Hall, of Yellow Tail Financial Planning, an independent financial adviser, has taken several complaints to the service involving investments or pensions on behalf of his clients. He says: “The ombudsman does not always have the technical knowledge to investigate cases properly; we had to explain to it the difference between initial charges and establishment charges, for example. There is also very little accountability and transparency, so it can be hard to see how the service reaches its decision.”
A spokesman for the ombudsman blamed the banks’ jargon for misunderstandings among adjudicators. He says: “Our work would be much easier if businesses dealt with us and their customers in plain English.”
Paul Grenet, 68, became so disillusioned with the FOS after he complained about Lloyds TSB that he set up a website, Problems with FOS decisions. Mr Grenet’s 86-year-old aunt was persuaded by Lloyds to invest almost her entire life savings, £126,000, in risky investments, which lost more than £30,000.
Lloyds offered £18,150 in compensation for mis-selling the investment, but Mr Grenet felt this was not enough, so he took his case to the FOS. “The adjudicator and ombudsman ruled that Lloyds TSB’s offer was fair and reasonable, and approved the payout. It later emerged, through my own calculations, that Lloyds had, in fact, deducted too much tax and had not followed the ombudsman’s guidelines when calculating interest on the payout.
“However, I could never get the ombudsman to admit that it approved Lloyds’ incorrect calculations,” Mr Grenet says.
The ombudsman says that it prefers to hear from consumers “in their own words”, without the help of an adviser. In contrast, banks have teams of trained staff to prepare a case and Mr Hall says that the adjudicators even appear “cosy” with bank staff.
The service has 700 adjudicators, who investigate the majority of complaints. If a consumer is unhappy with an adjudicator’s decision, there are 40 ombudsmen who will review the case to reach a “final and binding” decision. If the consumer is still not happy, the only option is to take the bank to a small claims court, which can be expensive and time consuming.
An FOS spokesman says that more than 50 per cent of adjudicators are law graduates, but admits that there are no minimum qualifications for the job. He adds: “It’s important that we deal with our workload professionally and efficiently. This means setting targets and keeping to them.
“We resolve a third of cases within three months, but if consumers prefer a more detailed, and lengthy, investigation they are always able to ask for a full review and decision by an ombudsman.”
Case study: forced to seek redress in the courts
Emma Woolf, 28, lost almost £10,000 after her Abbey business account was hijacked by fraudsters. The bank refused to compensate her and she took her case to the Financial Ombudsman Service.
However, after seven months she gave up hope of receiving a fair decision and is taking Abbey to court.
Ms Woolf was horrified to discover in March that fraudsters had been draining her funds for three months, mainly by making withdrawals at cash machines of up to £500. Abbey said it would not refund the money because the correct PIN had been used and the withdrawals were made near Ms Woolf’s home in Mill Hill, northwest London. However, she kept her card locked securely in a safe and has never written down the PIN or told the number to anyone. She was out of London when several of the cash withdrawals were made.
She says: “All the fraudulent transactions do not have any reference numbers, which is very suspicious. We have so far spent £3,000 in solicitors fees and my business is unable to trade because I have lost so much money to the fraudsters.”
Abbey refused to comment.
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