Mistakes,
and incompetence at the
UK Financial Ombudsman Service
How do people find this site ? Click here
to see what phrases people were searching for
STOP PRESS:
Martin Lewis the respected financial journalist and consumer champion
has an influential website
They are meeting the FOS and want readers to submit questions and
comment on FOS matters (good and bad)
Dont miss this chance to get involved... click here
to visit Martin's websiteMoneySavingExpert.com
The
reason for this website
NEW !
FOS Ombudsman gets it wrong !
'The Times' updates its story
This
website describes my problems with the Financial Ombudsman
Service whilst trying to get justice for an aged Aunt.
Here are some
of the issues:
Incompetent
staff !Why do I
say this...click
here to read what happened. It's a long
read but will open your eyes to how FOS works at every
level.
Failure
to follow their own guidelines or even tell me that they
had guidelines, thus causing me to accept a binding decision
I would otherwise have rejected.
Baffling
reasoning and decision making
Unwillingness
to explain their reasons
Unwillingness
to admit a very Senior Ombudsman has made a mistake. They
admit a mistake, but cannot admit it was the Ombudsman
himself who was wrong. (In a system with no appeals
process, they simply can't admit that Ombudsmen can make
mistakes !). In the end, the Principal Ombudsman decided
to pin the blame on an FOS department which was not involved
in the flawed decision
Not
treating both sides of the dispute equally
Lack
of a meaningful independent regulator or any means to
appeal (or even question or review) a final decision.
Even though FOS discovered a tax mistake in the same case
and have paid compensation for that, they declined their
own Independent Assessor's request to review the interest
rate used.
Huge
delays
EVIDENCE for
what I say
about my Aunt's case, is all confirmed in writing in the three
inch thick file of letters from the Bank, Adjudicator, Ombudsman,
Service Review Team, Service Review Manager, Independent Assessor,
Principal Ombudsman and Walter Merricks, Chief Ombudsman at
the time.
For the benefit of FOS staff
who can't believe what their colleagues did, the Case Reference
number is 5156222/KM/46.
I publish this web site so
that consumers will knowwhat
can happen if they go to
the FOS to resolve a dispute, and be aware of the standards
and policies which that organisation uses when reaching a
decision. I reported my bad experience to Lord Hunt for use
in his review of the FOS. You can read my evidence by following
the link below.
I also publish
my review of the Independent Assessor's role at FOS.
He was influential in my case because he accepted my concern
about the substantial shortfall between the Bank's offer of
compensation (recommended by the Ombudsman) and the figure
based on FOS in-house guidelines. He asked FOS to review the
interest rate used but FOS simply refused. The IA could have
made a formal 'recommendation' and forced the FOS to explain
its reasoning, but instead of demonstrating his independence
in this way, he had a cosy discussion with the Principal Ombudsman
after which he (the IA) backed down. Hardly an independent
way of handling the issue I would say, nor an effective one,
as neither the IA's concerns nor mine were ever answered by
FOS. The Independent Assessor at the time was a retired FOS
Board Member.
NEW...New FOS Operations Director appointed. Simon
Rouse has been appointed and joins from the NHS. Mr Rouse
has financial services experience which can only be a good
thing.Recent adverts
for Ombudsmen do not require candidates to have financial
services experience.
"His current experience of strategic planning in the
public sector - combined with his background in financial
services - means he comes with a unique understanding of the
issues we face" says Natalie Ceeney
NEW...As the Government cuts expenditure, salaries and
pensions, FOS is to appoint three new very senior posts.
Director of Operations, Director of Finance and Performance
and Chief Technology Officer. All earning over £100,000
pa.plus "flexible
benefits".
NEW...5 out of 6 complaints ( 760,000 ) resolved by Customer
Service staff are not referred to Adjudicator or Ombudsman.
The FOS
Annual Review says they
are handled using "the
most effective call-centre technology with the best personalised
customer service" ........."As a result of our focus on
resolving as many enquiries as possible at this early stage,
only around one in six potential complaints raised with our
consumer helpline during the year went on to become a case
needing the involvement of an adjudicator or ombudsman."
NEW...
June 2010. FOS appoints Linda Costelloe
Baker OBE to be the new Independent Assessor.
Unfortunately, her terms of reference look to be unchanged
so a wonderful chance has been missed to make the post genuinely
useful, authoritative and independent. The IA is paid
at almost £50k for 2 days a week, but has little authority
and is not allowed to review an Ombudsman's actual decision,
the last IA spent his time looking at administrative matters
(service standards) in around 1 in every 1000 cases.
NEW... About 600 FOS staff (40%) were recruited in the
year to June 2010...I
would be interested to learn how much training this large
number of new recruits received, especially those who were
destined to become Adjudicators. The FOS
Annual Review says this about training. "During
the year our staff spent .......an average of 4 days of training
for each employee ......... This training included tailored
induction-courses for new starters, technical refresher training
for experienced adjudicators and a range of management workshops."
NEW...About 400 (25%) of FOS staff are "outsourced
contractors". Some
of these are Adjudicators.
NEW...A few FOS cases may now be re-opened.
In his final Annual Review, the departing Independent Assessor
mentions the (very few ) circumstances in which an FOS case
may be re-opened. This seems to be new information, I have
certainly not seen it published before. Perhaps a delayed
response to Lord Hunt's suggestions in this area.
NEWFreedom of Information Act.
After a consultation staring in 2007, FOS is to at last to
be subject to the Freedom on Information Act. But not until
October 2011...
Money stolen from Bank Account
Bank says consumer at fault
Consumer knows she is innocent, goes to FOS
FOS accepts banks view, consumer knows its
wrong but the Ombudsman's decision is final
BUT LATER ...
Bank employee found to be a fraudster
Consumer NOT at fault
Ombudsman got it wrong
Bank eventually repays money, but consumer
has paid £3000 in court fees etc unnecessarily
That's why an appeals process is needed at
FOS
Can the consumer appeal ? Well, technically
no appeal is permitted, but perhaps YES as a result of new
information in the Independent Assessor's annual
report 2009/10 there may be a loophole available
NEW
! FOS seeking new Ombudsmen,
£64k, no financial experience
required !
FOS
recruits new Ombudsmen
The person
specification does not require any financial qualifications
or experience, but you do need a 'passion for fairness' apparently.
Pay is £64k, plus benefits, presumably the FOS "flexible
benefits" plan which includes, pension scheme, 25 days
holiday, life assurance, health insurance, death and injury
cover and private medical care.
Your decisions (right or wrong) are final and cannot be over-ridden
and are not subject to appeal, so if you make an incorrect award
its unlikely anyone will find out. Even if the FOS independent
assessor becomes concerned about your standards and thinks you
have acted questionably, you can just refuse to answer her,
and anyway she is not allowed to review your actual decision.
Sounds a good job, I wish I was younger. Apply
here.
I
am not sure if my Ombudsman had a 'passion for fairness', he
didn't bother to tell me that the compensation offered by the
bank (which he recommended as fair and reasonable) did
not meet the FOS's own guidelines on tax and interest
rates, with a shortfall of about £8000...was it fair to
let me accept his decision without telling me that ?...Hmmmmm...
ASA
article "FOS - an example of good practice ?" In 2005
"around 12,000 initial complaints to the FOS were ‘resolved’
before being taken on as cases because relatively junior FOS
staff in the Customer Contact Division told the complainant
that the offer of redress made by the firm was ‘reasonable’
" In 2009/10, 760,000 initial cases were handled
without reference to an Adjudicator or Ombudsman.
Follow this site on Twitter,
or 'join the conversation' via the link on the twitter feed
lower down the page orsend
me an email
This
web site is intended to publish my experiences and I don't want
to make it a 'forum' for all views. However if you do want to
have your say I suggest the Consumer
Action Group forum on FOS. This is not related to
this site in any way, but makes interesting reading and allows
anonymous comments. This web site is not anonymous.
If FOS want to respond,
I will be happy to publish what they say. Reference
number is 5156222/KM/46.
Many thanks to
all who have written to me with kind words about this web site.
I am sorry I cannot help you with advice.
I am simply not qualified to give any advice regarding how to
proceed though I can sometimes comment, based on my experience.
My
experience of the FOS from my own dealings with them:
I
believe the FOS is arrogant and complacent, unwilling to
admit that its 940 (in Jan. 2010) Adjudicators and Ombudsmen
can make mistakes and unwilling to correct mistakes if they
are found. The FOS Service Review Team who handle complaints
are not allowed to consider an Ombudsman's "decision",
only administrative matters can be considered, so there
is no avenue to correct mistakes.
I
also feel the FOS Independent Assessor is far too close
to the FOS and is essentially a toothless watchdog. Extraordinarily
for a public official, his address is kept secret, he is
contactable via a PO Box and replies to correspondence on
headed paper that does not have his proper address, telephone
or email details. Click here
to read my detailed review of the IA's role.
A
few examples from my Aunt's case:
FOS
decided an 84 year old woman who had inherited
a share portfolio and never traded was an experienced
investor
FOS
decided that advice for an 84 year old, unwell, woman to
remove money from a building society for investment and
leave only 7% of her assets in cash was perfectly acceptable.
This is despite my professional adviser's report to the
Ombudsman, saying that the bank was negligent
to offer such advice, which would have caused a failure
if offered as an answer to a question in a basic
IFA examination.
FOS
publish guidelines for firms and consumers on tax and interest
rates to be used in compensation calculations, but the Chief
Ombudsman says these do not apply to the FOS itself.
Why have guidelines in this case ?
FOS
just accepted the firm's compensation calculations without
checking them properly (thus missing a tax error which,
in the end was partly repaid by FOS themselves). It
seems that FOS policy is to use its own guidelines if it
has to calculate a compensation figure itself, but not to
use them when the firm offers a settlement.
FOS
accepted the bank's offer, which did not comply with their
own guidelines, but will not explain to me why the guidelines
should not apply in my Aunt's case, despite the bank's offer
falling £8000 below the guideline requirements.
FOS
will not admit that the Ombudsman made a mistake despite
having actually repaid tax which was incorrectly deducted
as part of the Ombudsman's award. Instead of blaming
the Ombudsman who failed to notice the tax error, the Principal
Ombudsman chose to blame another FOS department which had
no part in the decision whatsoever.
FOS decline to answer
their own Independent Assessor when he asked them to
review the interest rate used to arrive at the compensation
and, perhaps even worse, the Independent Assessor just allowed
them to get away with this refusal, despite having the power
to force them to answer him. Why did he bother to ask, I wonder
? In fact why have an Independent Assessor at all, if he can
just be ignored ?
This clip has come from THE TIMES online website. See
the original article here (opens in another window)
Please go to the Times site to follow the two other links
in the clip.
Here
is what Anthony Speaight QC says
about FOS decisions
It is not only consumers who have
problems at the FOS. IFA's also feel concerned. IFAs
can find themselves the victim of a dubious decision
(perhaps made by an Adjudicator who does not have IFA
qualifications) which, if accepted by the consumer means
the IFA is forced to accept the decision with no
possibility of appeal.
Here
is what Lord Neill and the Equitable Members
Action Group says about FOS decisions and the Hunt Review
of the FOS
Equitable Members Action
Group (EMAG) are fighting for fair treatment for their
members as a result of the collapse of Equitable Life
and the failure of the regulators to intervene. The matter
came up before the FOS. EMAG then asked Lord Neill to
advise them on whether the service provided by the FOS
has fallen short of the standards which policy holders
were entitled to expect. His overall conclusions include
the snippet shown beneath which gives the general flavour.
The Executive Summary of
the Lord Neill Report can be seen on
this web site. It makes interesting reading for those
considering using the FOS. (opens in another window)
EMAG's Stephen Wynn has also
examined and commented on the Lord Hunt review of the
FOS. His conclusions are available by visiting this website
http://www.comparativetables.com/hunt.htm
(opens in another window)
So
where are we now ?
Despite three years of arguments with the FOS, on top
of months of earlier discussions with the Bank, my Aunt
still has not got the level of compensation she would
have been awarded if the FOS had applied their own guidelines
to her case. They will not explain why the guidelines
are not applicable to her and refuse to discuss the
case further.
Extraordinarily, the FOS
probably would have applied the guidelines if the Bank
had refused to offer any compensation, but as the Bank
did make an offer of some sort, FOS do not feel they
need to apply their guidelines and accepted the Bank's
figure without checking it in detail. Even more extraordinary
is the fact that the Chief Ombudsman, says these guidelines
are to enable firms and consumers to settle without
coming to the FOS, so it follows from this that they
must by definition produce a fair and reasonable result.
What can be done now ? Well probably nothing. There
is no way of appealing against an FOS decision, nobody
to turn to to complain. My Aunt's MP is not interested
in taking the matter up in Parliament, though he does
mention the possibility of direct court action against
the FOS. We could take the FOS to court on the basis
that they have been negligent (my solicitor says we
do probably have a case) but he advises against this.
He says FOS are likely to find a way to appeal any judgment
against them and we would end up in the Court of Appeal
with unlimited costs. My Aunt cannot afford this risk.
We could have asked for a Judicial Review, which seems
to be the only way to get an independent review of an
FOS decision, but FOS did not tell me that that option
was available and now it is too late, in any case it
is very expensive compared with the likely gain and
the Ombusman's powers are so wide it almost impossible
to win.
We could go to mediation,
(we would probably end up at mediation if we take the
FOS to Court), but even if FOS agreed to pay the extra
interest due, they would certainly insist upon a gagging
clause so it would all be hushed up. I am reluctant
to be involved in a cover up of matters that should
be public knowledge. FOS should not try to hide anything.
This may change when FOS come under the Freedom of Information
Act in 2011.
Ombudsmen continue to make
their decisions, safe in the knowledge that they cannot
be challenged. Errors remain undiscovered and uncorrected
and the overall standard of decisions will gradually
fall as the Ombudsmen continue beyond criticism. Until
some method of allowing a decision to be reviewed is
introduced, the FOS will continue in a world of its
own, happy in their certainty that 1000 Adjudicators
and Ombudsmen never make any mistakes in the 200,000
cases they will handle in the 2010-11financial year.
Unless, of course, more
consumers complain about FOS policies and procedures.
Or perhaps the role of the Independent Assessor is reviewed,
and he/she is made more independent of the FOS, with
increased powers. The retirement of the last IA in 2010
gave a chance to review the authority and responsibilities
of this post, but this chance was ignored and the post
remains as before, cosy and toothless. Read my review
of the IA's role here.
FOS
APPOINTS NEW CHIEF OMBUDSMAN...NATALIE CEENEY
Natalie Ceeney will receive £170,000
a year to replace Walter Merricks who left the FOS recently. She
arrives from heading the National Archives, where, according to
an article
in The Times, she "antagonised many users". She apparently
has no experience in the Financial Services Industry which may be
a good thing. As she is not in the Industry she may be shocked at
what is going on. Adjudicators and Ombudsmen with no specific financial
qualifications acting as Judge, Jury and Executioner with NO APPEAL.
As a maths prodigy she may realise that getting the interest rate
wrong by 1% means a lot of money to a pensioner. Click here
to read FOS statement on the appointment of Natalie Ceeney, as they
gear up for 940+ adjudicators and ombudsmen to handle 200,000 cases
a year with no appeal against their decisions. Click here
to read a biography of Ms Ceeney
Click here
to read an interview with her
