Many of us have at some point been let down by a financial firm. And while it would be wonderful if simply complaining was enough to get the issue resolved, that simply isn’t always the case.
When companies don't respond to complaints, we can turn to the Financial Ombudsman Service (FOS).
The FOS plays a hugely important role when it comes to keeping financial firms in line and delivering compensation to people like you and me when we have been failed by those firms.
If a financial firm doesn’t resolve the complaint to your satisfaction, then you have the option of taking it to the FOS, who will investigate and make a judgement. What’s more, it’s absolutely free for complainants to use.
The catch? You could be facing an increasingly long wait for justice.
How to complain to the Financial Ombudsman Service
Your complaint is important to us
The simple fact is that the FOS is absolutely swamped with cases that need investigating, and does not have anywhere close to sufficient resources to deal with that workload.
Last week the organisation’s chief executive, Caroline Wayman, appeared before the Treasury Select Committee and admitted that there is a significant backlog building up.
This followed the testimony of a whistleblower, who claimed that there are currently 30,000 complaints still waiting to be assigned to a FOS investigator, while 8,000 claims have been investigated but are still waiting on an actual decision from the adjudicator.
Wayman pointed out that the FOS typically deals with around 100,000 cases a year, but that it had seen a huge jump in complaints last year about payday loans.
Britain’s 4 most-hated services: how to complain and win
50,000 payday loans in the way
According to Wayman, in the last year the FOS has received 50,000 claims related to payday loans. By comparison, the last few years have seen typical complaints levels of around 2,000 cases for short-term lending.
The FOS had actually expected a sharp rise up to around 20,000, but clearly, it had significantly underestimated the increase.
What’s more, the FOS admitted it would likely have been even higher if Wonga hadn’t gone into administration. Once Wonga hit the wall, the FOS was no longer able to take on new cases about the firm.
The end is in sight for PPI claims
A huge part of the FOS’s workload in recent years has been PPI claims. Indeed, last year it accounted for more than half of all of the complaints received by the Ombudsman.
This situation will soon change however, as the deadline for PPI claims is creeping ever closer. If you believe that you were mis-sold PPI cover - and millions of people were - then you only have until 29th August to claim for compensation.
By introducing a deadline for claims, the Financial Conduct Authority (FCA) wanted to draw a line under the scandal, but it has inevitably led to a swarm of claims coming in.
As plenty of readers will no doubt attest to, it’s also led to a swarm of cold calls from claim management firms pushing people to put in claims as well.
Cold calls: how to stop nuisance phone calls
From bad to worse
The huge pile up of cases that haven’t even started to be addressed is a big problem.
It’s simply not acceptable that complainants are left in limbo for months on end, with zero progress on their claims. With firms expected to resolve complaints within eight weeks before an issue can be taken to the FOS, so it stands to reason that the FOS should act speedily too.
Huge delays not only erode trust in the Ombudsman itself, but it also undermines the authority of the Ombudsman over the very firms that it is supposed to judge.
There is a very real prospect of these delays becoming even more significant, with the FOS dramatically increasing its potential workload, by expanding its service to cover small and medium-sized businesses too.
From the start of April, businesses with an annual turnover of less than £6.5m and fewer than 50 employees will be able to take their unresolved complaints to the Ombudsman in much the same way as normal individuals can.
That’s an additional 210,000 businesses for the FOS to take cases from.
It’s not exactly outside the realms of possibility that come April the FOS will suddenly have thousands of cases to look at from small businesses, besides the ones it hasn’t even started to deal with from ordinary individuals.
What’s the answer?
In order to deal with these new SME demands, the FOS is hiring an additional 20 ombudsmen, which is a good start. Nonetheless, it will inevitably take time to make a dent on those untouched cases.
Interestingly, Wayman confirmed that the FOS is losing staff on a voluntary redundancy programmes, replacing them with expensive contractors which she claims will give the FOS greater flexibility.
Only time will tell if these contractors mean that cases are dealt with more promptly. There’s also the fact that once the PPI deadline passes, in theory, the FOS staff will have significantly more time to spend on other cases.
But there should also be a discussion about the funding of the FOS. As things stand, it is entirely reliant on a levy paid by the businesses it covers, ranging from small one-man-band financial advisers all the way up to giant high street banks, with the size of that levy determined by the size of the firm in question.
The FOS doesn’t receive a penny from central government. This may need to change however.
Trust in financial firms is poor enough as it is - we can’t afford for trust to evaporate from the independent organisations set up to protect us and our rights.
Have you ever complained to the FOS? What was your experience? Please tell us your story in the comments below.