I am writing regarding the story that Lighthouse Advisory Services has been unsuccessful in challenging a Fos ruling over a client refund plus 8 per cent a year interest, (FTAdviser, 9 November).
I am aware that the 8 per cent interest rate was set by the law, but actually courts of all shapes and sizes have not been applying this penal rate to awards for years now, especially as the Bank of England base rate has been at 0.5 per cent for six years.
The principle of an award in law is to not inappropriately profit the complainant, but this does, yet there is a legal precedent to avoid this happening. Likewise, the courts and case histories, while not binding on the ombudsman, are also the guide by which the ombudsman works. Typical awards for legal cases have been in the region of 3 per cent to 4 per cent, reflecting an average between deposit rates the winner would have achieved or borrowing rates he would have saved and a rational thought process.
Surely it is time for compensation to have interest added at a more realistic rate, such as 2 per cent for investment related returns to represent a generous deposit return, or 5 per cent where the complaint centred upon borrowing? We know already the ombudsman has made awards on investment cases of comparative alternative investment products too, so it would only apply to other such cases.
There is no justification at all for the ombudsman to be so out of step with the highest courts in this land, creating an inequitable profit to the complainant and indeed, a significant and unrepeatable windfall for the delays in resolving cases which can so often happen as well.
Philip J Milton
Managing director,
Philip J Milton & Co,
Barnstaple,
Devon
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