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Ombudsman service is struggling as complaints flood in and more firms appeal against rulings
The Financial Ombudsman Service is so overwhelmed by consumer complaints that many cases are now taking between 18 months and two years to be resolved.
Guardian Money was contacted this week by a Somerset couple who have been waiting more than 18 months for an ombudsman to look at a complaint they made against LV= (Liverpool Victoria).
Despite just £625 being involved and the considerable length of time they have already been waiting, we were told it would be at least a further four weeks before their case is looked at.
The Duttons, from Staplegrove, near Taunton, are by no means alone. Thousands of other consumers who feel they have been unfairly treated by a financial company – many of whom who will be thousands of pounds out of pocket as a result – have been waiting years for their claims to be heard.
Most would have had a speedier resolution at the small claims court.
The FOS, headed by Natalie Ceeney, says only those consumers who are deemed to be in financial hardship are pushed to the top of the queue, everyone else simply has to wait their turn.
Ironically the service was set up to provide a speedy and cheap way to resolve disputes between financial companies and their customers without having to go to court. Anyone who has reached deadlock in a dispute with a bank, insurance company, or similar, can apply to the FOS for independent arbitration. The finance firm involved is bound by the FOS findings and has to pay a £500 fee for every complaint to the FOS brought against it. It is free for the consumer.
In recent years the FOS has been swamped with cases.
In July last year we reported on the case a Sheffield reader who contacted us after they had been waiting 18 months for an ombudsman to adjudicate on their dispute with Barclays.
At around the time several other readers wrote complaining of delays – one reported waiting three years. At the time the FOS blamed the problems on a record number of complaints about payment protection insurance (PPI). It said it was taking on 300 new claims handlers to improve the service.
Although the payment protection problem has been, partly at least, taken out of the equation because the banks have now agreed to pay PPI claims, delays at the FOS have, if anything, got worse.
The Duttons have been in dispute with LV= since 2009. They claimed on their home insurance after the glass door on their oven shattered unexpectedly. LV= provided a replacement cooker as it was no longer possible to buy the door alone. The dispute arose because the new oven was not as good as the one it replaced. After waiting for the FOS to act for a year, they decided they needed a stove they could use and spent £625 on a like-for-like replacement. They are still storing the LV= stove and are very keen to resolve the matter.
A spokeswoman for the FOS blames the delays on a doubling in its workload over the past five years, including a 26% increase in the number of cases referred in last year alone. She adds that adjudications are also increasingly being appealed against.
"We have seen over the last year disputes becoming harder-fought, with businesses and consumers taking a more entrenched attitude to complaints.
"This has resulted in more cases being referred upwards from an adjudicator to an ombudsman for a final decision. In 2010-11 17,465 cases were resolved following an ombudsman's decision, compared with 10,730 cases the year before."
She says in the past year the FOS has increased its ombudsman panel by 49% – it now has 84 decision-making ombudsmen, but the delays remain.
"We currently resolve around half of all cases in three months and two thirds within six months – and we're continuing to take steps to improve the time it takes us to deal with cases."
Asked why the FOS hadn't simply taken on more staff given that these problems are well documented, she said training takes three months and that the organisation wasn't prepared to recruit staff faster than it could train them to the "appropriate standard".
Given the problems at the FOS, consumers sure of their case and needing a quicker resolution can always head to the small claims courts. These courts can hear claims up to £5,000 in value, but it costs around £100 to bring a claim, although you will get these costs back if you win your case. If you prefer to stick with the free FOS, prepare for a very long wait – particularly if the early adjudication goes against the company, and it chooses to appeal to the ombudsman.
How to complain
The Financial Ombudsman Service is there to help you but have to have given the company you are in dispute with eight weeks to resolve the matter. Call the FOS consumer helpline on 0300 123 9 123 or 0800 023 4567 between 8am and 6pm, Monday to Friday, or you can email complaint.info@financial-ombudsman.org.uk
Staff will explain your rights and how to complain. The website lets you download its complaint forms and you can fill them in online or print them off to be filled in by hand.
If your complaint is about payment protection insurance (PPI), you will also need to fill in its PPI consumer questionnaire.
There is a lot of information on the site which sets out in what circumstances the FOS will find in favour of consumers. Its main test is whether you have been dealt with in a "fair and reasonable" way.
It will also take account of the law, rules and good practice in the industry, when arriving at its decisions.
Miles Brignall
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