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FOS DECISION FOUND TO BE WRONG !
The Ombudsman's decison is final...what happens now ?

On November 21st 2009, Lauren Thompson, a financial journalist at The Times, published a story about Ms Emma Woolf who had money fraudulently removed from her bank account. The bank refused to compensate her and she took her case to the Financial Ombudsman Service.

Ms Woolf found that someone had removed money from her account, 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. 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, and the fraudulent transactions had no reference numbers.

After seven months she gave up hope of receiving a fair decision from the FOS. I do not know what the FOS precise 'decision' was in this case, but it clearly was not in Ms Woolf's favour. If it had been, the bank would have been legally bound by the decision, and would have repaid the money and that would have been an end to it. But that did not happen.

But the bank WAS in the wrong...On 22nd May 2010, The Times updated the story.

It appears that Santander (the new name for Abbey) initially refused to repay the missing money and suggested that Ms Woolf's fiance had stolen it. But a year later the Bank changed its mind after the police charged a bank employee with fraud after finding customers' financial documents in his house. The money was repaid, but the bank did not apologise, and Ms Woolf was forced to sign a confidentiality agreement. However Ms Woolf had already paid £3000 in legal fees and her business had been unable to trade for a while because of the loss of funds so this was not an ideal outcome.

FOS have no procedure to permit appeals against decisions and maintain that the Ombudsman's decision is final, and no Ombudsman can over-rule another. This is clearly only satisfactory if the FOS is CERTAIN that all 163,012 decisions last year were correct and common sense tells us that it probable that many decisions were wrong.

BUT things have changed recently is certain situations. Lord Hunt's review of the FOS did recommend that some appeals be allowed and FOS (via the Independent Assessor) has recently accepted this. Some appeals may now be possible.

Could Ms Woolf actually appeal to FOS even though no procedure is published for this ?

Well, the answer is probably YES in my view!

The FOS Independent Assessor has changed and the last holder of this post has published his last Annual Review. For the first time he has mentioned that an appeal my be possible, though the conditions are so tight as to make it very difficult. I have never seen such a suggestion in any FOS publication before and it is probably as a result of comments made by Lord Hunt in his review of the FOS (and pointed out be me on this web site !)  Here is what the IA says.

'There is, however, one very special set of circumstances where it may be possible for someone bringing a complaint to have their case looked at again by the ombudsman. This is where material new evidence comes to light, which is compelling in nature and which was genuinely not available during the original investigation. In these very rare cases, this can provide the basis for a fresh complaint to be made about the matter in dispute.

These criteria are hard to meet, because it is not enough simply for the new evidence not to have been put forward at the time of the original complaint. The new evidence has to have been unavailable – or not been known to have existed – when the ombudsman originally considered the complaint'.


So if I was Ms Woolf, I would appeal to the new Independent Assessor, quoting the IA's remarks. Point out that fradulent activity on the part of a bank employee was NOT KNOWN at the time of the original complaint and completely invalidates the bank's defence. Ask for the case to be reviewed by a different Ombudsman and if he finds in your favour ask to be put back where you would have been if the bank had not made the mistakes including repayment of legal fees and all money lost to the business !  
If she lets me know what happens I will publish it here.

FOS logic according to my Adjudicator...how FOS decides who is in the right when the evidence is evenly balanced

In Ms Woolf's case, the bank said it was not at fault whilst Ms Woolf said 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, and all all the fraudulent transactions had no reference numbers. Hmmmm...which side is right when the arguments are evenly balanced ?.
Well, FOS has an interesting logic which means that in equally balanced cases it will find in favour of the bank.

The Adjudicator in my case decided to explain FOS reasoning to me...here is what she said.

'In order for your complaint to be upheld, the available evidence will need to persuade me that your version of events is more likely than that of the firm, not just as likely'.
(my italics) Source: letter from Adjudictor to me dated 21/9/2005, FOS case ref. 5156222/KM/46)

If this policy is applied, it follows that in cases where the two versions are just as likely to be correct, then FOS will not be persuaded in favour of the complainant. Its an uphill struggle for complainants dealing with FOS, the banks will always have highly experienced professionals handing their side of the case, and the complainant will usually be representing themselves because FOS prefers that. With an inexperienced Adjudicator and the logic described above, it seems to me the banks have a built in advantage.