Mistakes, and incompetence at the
UK FINANCIAL OMBUDSMAN SERVICE
people have visited this site.   Click here to see what they were searching for

LATEST NEWS... IFA's have asked FOS to reveal the qualifications of Adjudicators and they have apparently refused.
The FSA has been forced, under the Freedom of Information Act, to admit that some of its staff have low levels of advice skills,
but FOS is not covered by the Act until late in 2011. This story comes from the IFA trade journal "Money Marketing". Click here to read the full article.
REASON FOR THIS WEB SITE
To expose FOS mistakes and incompetence at several levels
by publishing my evidence to Lord Hunt's independent review of the FOS
FOS changes complaints procedure

This web site tells what can happen when consumers ask the FOS to resolve a dispute, and describes the standards and policies which that organisation uses when reaching a decision.

What can happen when things go wrong at the FOS

Here are some of the issues:

  • Incompetent staff !  I would not say this without evidence...
    Click here for full details or here for a shorter version.
    Both are 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 still refused their own Independent Assessor's request to review the interest rate used. So much for the Independent Assessor !
  • Huge delays
  • For the benefit of FOS staff who can't believe what their colleagues did, the Case Reference number is 5156222/KM/46.

The role of the FOS Independent Assessor

The Independent Assessor was influential in my case because he agreed with 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 on interest rates. He asked FOS to review the interest rate used but FOS simply refused. He did nothing to make them answer !

The current IA had not been appointed when this took place, however the IA's toothless role and lack of real authority remain unchanged.

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 at the time, Principal Ombudsman and Walter Merricks, Chief Ombudsman at the time.

Other FOS news and information

NEW... FOS appeals policy.

FOS suggests in Ombudsman News 87 that asking for a case to be reviewed by and Ombudsman constitutes and 'appeal' against the Adjudicator's view. Hmmm... I am not sure that a 'review' by a more senior staff member actually means an independent review has taken place. (In my case the Ombudsman missed the same £4000 tax error as the Adjudicator). But surely passing a case to an Ombudsman because the Adjudicator is incapable of handling it properly cannot be regarded as an appeal. If these circumstances only one competent person has assessed the case. No review is then possible because FOS does not permit reviews of an Ombudsman's decision.

NEW... More changes at the top at FOS !

  • Chief Ombudsman Walter Merricks resigned 2009,
    replaced by     Natalie Ceeney CBE
  • Independent Assessor Michael Barnes CBE retired May 2010,
    replaced by Linda Costelloe Baker OBE
  • Operations Director Ray Hewlett steps down Summer 2010
    replaced by Simon Rouse    , see below
  • Corporate Director David Thomas retires 2011, some duties may go to the new Director of Finance and Performance
  • Director of Finance and Performance, interim post holder, Stuart Curl
  • Chief Technology Officer, no appointment yet
  • HR Director Peter Stansfield left in May, interim post holder Jacquie Wiggett, Director of HR and OD, may now be full time.
  • Service Review Manager, no current post holder, last holder, Ray Neighbour now listed as an Ombudsman
  • New Ombudsmen being recruited, Summer 2010, £64k, plus benefits
    The person specification did not require any financial qualifications or experience

New FOS Operations Director appointed. Simon Rouse has been appointed and joins from the NHS. Mr Rouse DOES have financial services experience which can only be a good thing. Recent adverts for Ombudsmen do not require candidates to have financial services experience.  Natalie says  "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"

FOS Ombudsman gets it wrong !   ' The Times ' updates its story

  • 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 appeals system exists at FOS but perhaps as a result of new information in the Independent Assessor's annual report 2009/10 there may be a loophole available

As the Government cuts expenditure, salaries and pensions, FOS is to appoint three new very senior posts. Director of Operations (appointed), Director of Finance and Performance (interim in place) and Chief Technology Officer. All earning over £100,000 pa.plus "flexible benefits".

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."

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.

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."

About 400 (25%) of FOS staff are "outsourced contractors".  Some of these are Adjudicators.

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.

Freedom 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...

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The way complaints about FOS service standards are handled has been quietly changed. The Service Review Manager is now an ordinary Ombudsman and references to the Service Review Team seem to have disappeared.

Heads of Casework ( who are not apparently Ombudsmen themselves) now handle complaints about Ombudsmen's standards, click here for the new policy.

I now anticipate long overdue and much needed changes to the Independent Assessor's role. In my case the Principal Ombudsman said FOS would not accept any recommendation made by the IA so it is difficult to understand why the IA exists at all if he/she can be ignored.

My view on the role of the Independent Assessor

Natalie Ceeney (FOS Chief Ombudsman)
praises "Ombudsman News" magazine
Lord Hunt disagrees "Even in a revamped form, (O.N.) cannot improve communication to the extent required"

What Natalie says about Ombudsman News
In Ombudsman News 87 the Chief Executive of the FOS tells how the case studies in that publication are popular with chief executives and heads of financial firms. It seems that FOS use O.N to provide feedback to firms about complaints. But Lord Hunt took a much more critical view in his review of the FOS.
[Full Ombudsman News 87 article]

Lord Hunt's critical comments about Ombudsman News in his independent review of FOS

  • it is not clear to the reader whether material in old issues represents current FOS thinking on the issues discussed;
  • more generally, it is odd to use a magazine format as the main reference digest for significant decisions;
  • it is not clear that a member of the public using the service for the first time would know what the magazine covered.

"Even in a revamped form, this publication cannot improve communication to the extent required so I also I recommend another, more radical, change, namely that the FOS should develop a public interactive system – which I call "FOSBOOK" – as the main means of recording and promulgating details of its developing practice and decisions."
[Full Hunt Review] See para 5.4 and 5.5 for his comments on O.N in full.

What the FOS Service Review Manager (at the time) said
"Ombudsman News ......is not a definitive statement of the law, our approach or our procedure". Indeed this or a similar statement now appears in recent O.N. editions.

To summarise:  Ombudsman News may be useful for giving Bank Chief Executives an idea of what FOS does, but they should not use it as a guide to FOS policy. As Lord Hunt pointed out, members of the public have no comprehensive guide to the policies of the FOS, indeed he suggested such a guide (the FOSBOOK) would help FOS staff too.  

But none of this matters in practice, because the Ombudsmen can largely do whatever they wish without fear of criticism or appeal. In my case the Ombudsman ignored case studies, guidance and statements published in O.N. as well as in other FOS publications, thus allowing a £4000 tax error to pass unnoticed. (FOS now admit this). The Independent Assessor also told him to review an interest rate issue (also covered in O.N. and elsewhere) which would have increased the bank's offer by a further £4800. The FOS, (who had already missed the tax error), simply refused to reply and the Principal Ombudsman intervened, saying FOS would not, in any case, accept any formal recommendation the I.A might make on the issue. So the I.A.'s concerns were brushed aside and remain unanswered to this day.
[FOS case ref. 5156222/KM/46]

FOS Ombudsmen have medieval authority
  • They are not required to follow the law
  • They can ignore FOS publications and guidance
  • They cannot be over-ruled by anyone
  • They can ignore the FOS Independent Assessor with the backing of the Principal Ombudsman
  • Their decisions are not subject to appeal, so they are rarely, if ever, challenged, so mistakes are likely to pass un-noticed and un-corrected
  • It's a disgrace, who else in public life has such authority without the right of appeal
  • FOS is not covered by the Freedom of Information Act
Links to other FOS information

Where to find FOS guidelines and policy 

Lord Hunt's review of the FOS in full

What Jane Sanders, an FOS whistleblower and
ex-adjudicator says about FOS     
"absolutely disgusted" ......."if adjudicators don't meet their targets, they don't get their bonus so of course cases are going to be rushed through."

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.

What Anthony Speaight QC says about FOS decisions
"Unappealable, compulsory, summary jurisdiction"

Lawyer Simon Orton explains the difficulty of challenging FOS because they don't have to follow the law
"The Ombudsman is not required to articulate clearly in his decision his reasons for departing from the legal position"

What Lord Neill says about FOS on behalf of the
Equitable Members Action Group (EMAG)
"FOS service fell short of the standards they were entitled to expect"

Barrister Peter Hamilton on the qualifications for Natalie Ceeney, the new FOS Chief Executive
"The FOS board seem to think that the person who will have the responsibility to resolve the very largest and highest- profile cases does not need to be a lawyer or even have any legal knowledge"

What the Equitable members Action Group secretary says about FOS

The Times article on "Shoddy Watchdog"

The Observer article "Barclays let off lightly"

MoneySavingExpert Martin Lewis (forum on FOS matters)

Consumer Action Group (forum on FOS matters)

Wikipedia entry on the FOS

Biography of Natalie Ceeney, New Chief Ombudsman

Video of Natalie Ceeney introducing FOS on Youtube

Link to Debretts brief biography of Natalie Ceeney
More detailed info if you join Debrett's

'Money Marketing' article about FOS Adjudicator qualifications
Also comments on FSA staff standards
Want to comment ?

Follow this site on Twitter, or 'join the conversation' via the link on the twitter feed lower down the page or send 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 following:

MoneySavingExpert web site discussion on FOS
Martin Lewis is a respected financial journalist and consumer champion, his website now has a form on FOS issues, anonymous if you wish.

Consumer Action Group forum on FOS.  This is not related to this site in any way, but makes interesting reading and allows anonymous comments.

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 ?

Click here for a shorter version version of my evidence

Click here to read my thoughts on the role of the Independent Assessor


FOS_problems twitter feed


Here is what FOS whistleblower and ex-adjudicator Jane Sanders says about FOS decisions



The above clip has been taken from Money Marketing web site. See the original Money Marketing page (opens in another window)


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.

The above clip has been taken from the IFAs-OK web site.  See the original IFA web site page (opens in another window)

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