The Financial Ombudsman Service has been accused of ignoring key details of complex complaints, and taking too long to consider more difficult cases.
Peter O’Donnell, chairman of the Mortgage Claims Bureau, said his clients have been left in limbo for months, and subject to “lucky dip decisions” by the Fos.
He claimed the delays relate to complaints he has lodged which are more difficult than the adjudicators are trained to handle, involving investments into offshore or off plan property and related equity release loans to pay for the property deposits.
The criticism follows changes in how the Fos deals with claims, revealed by FTAdviser last month, which have been lambasted by some of Fos’ own staff for risking the wrong decisions.
Under the new structure, the person at the Fos who first receives the complaint will consider it - regardless of whether it is about a type of product in which they have specialised knowledge.
Mr O’Donnell accused the service of a decision-making process which failed to consider all the parts of complex claims, which he said contradicted the required independence of adjudicators and ombudsmen.
He has also questioned the consistency and methodology of the ombudsman, and complained to the independent assessor which acts as the Fos’ watchdog.
The Financial Ombudsman Service responded saying consistency is important and that it sets out its approach to cases on its website, in its technical notes and in ombudsman news.
Out of 41 complaints from his firm to Fos, only two have been provisionally upheld after seven months, and there had been no final determination on either.
During the same period his firm’s clients had 68 payouts from the Financial Services Compensation Scheme, rising to 95 payouts out of 102 lodged to date, though the two bodies use different decision-making processes.
In response to his complaint about Fos, Mr O’Donnell was told by an omdusman team leader, who was unamed in the note, the ombudsman service provides an alternative to the court, not a replacement.
The note read: “As you know, due to the complex nature of these cases, there’s a lot to work through.”
Mr O’Donnell told FTAdviser: “The Fos seems to be an entity created by the government to have a sweet political face for clients who feel they have been wronged by a financial institution.
“Maybe on a PPI claim that’s valid, maybe on a bank charge that’s valid, but on a mis-sold investment and equity release interest-only mortgage to finance it, they are totally out of their depth.”
He added in his view, the Fos implement judgements unevenly.
“It’s simply that it is a bit of a lucky dip and I don’t think there’s room for lucky dips in such serious matters.”
A spokesperson for the Fos said the service followed rules set by the Financial Conduct Authority to take into account relevant law and regulations, regulators rules, guidance and standards, codes of practise and where appropriate, what they consider to have been good industry practice at the relevant time.
“This means that, while we take relevant law into account, our role is to decide what is fair and reasonable in all the circumstances of the individual cases we see.
“And we publish each of the final decisions that we reach to help show how we have applied those approaches – we find that cases which may look superficially similar may have different outcomes because there are material differences between them.”
In a seperate case, Paul Lazenby, director at insurance broker and IFA Manor Brokers, told FTAdviser he had lodged a number of endowment complaints and a pension transfer case with the Fos.
In two cases the Fos found against Manor Brokers and the firm has to pay compensation, however in over a dozen others the Fos has found in the firm’s favour.
Another example involving an endowment policy where the clients had made an earlier complaint saw Mr Lazneby win a provisional decision at the Fos, only to lose on the Ombudsman’s final decision two years later.
“Ironically, the Fos adjudicator had asked us to time bar the complaint on the basis that the complaint made earlier meant that they were aware of the potential fall in value, “ he said. “Fos turned down that suggestion on a technicality.”
ruth.gillbe@ft.com
