XML FeedsWhen the Financial ombudsman service are not impartial
By Value hunter on Sep 30, 2010 | In Bad business, What is the point?, Quango watch
With hundreds of thousands of individuals putting their trust in the independance of the Financial Ombudsman's service (FOS) every working day, to resolve their disputes, at the very least, after the months to deal with a case, you would expect them to be impartial and fair.
I had a reason to believe their own paperwork, about their "aims" and sense of "fair play" - until I looked around for some information.
The complaint I submitted was for payment protection insurance (PPI) - 10 months later it finally reached an adjudicator. He contacted me, asked about the employment status and said he'd be in touch soon.
He didn't uphold our complaint, so being the sad type, I did some digging around.
Having a moan am I?
Not likely, the following information shows that the FOS are not an impartial service at all!
Car dealership sells PPI - they have to have all the paperwork up to date for the FSA, sell it in an honest and fair manner. Should they be late submitting paperwork or it is incorrect, they risk a fine. They have to pay the FSA fees for keeping their staff up to date with FSA rules and guidelines.
At constant risk that if a complaint comes in about their conduct in selling the PPI, then the FSA could turn up and audit all their paperwork. The same applies if a complaint against them is upheld, the FSA could just turn up to audit other sales of a similar type.
They have nothing to hide though, so it wouldn't be a problem right?
Enter a new type of company - the "Principal company"
This company is accredited by the FSA to train dealership staff (and others) in the laws and selling rules of the FSA. This company pay the FSA a fee.
For a fee, the dealership join this company, it's a very attractive proposition, as this principal company advertise;
Any comebacks or complaints, the dealership refer all the paperwork to the "principal company" and they will answer questions on your behalf, when the FOS come knocking.
Yes, you guessed it, our complaint is against a dealership - now known as an "appointed representitive" company
Yes, they pay a fee to a "principal company" who are a third party company now answering questions about the sale of PPI, even though they cannot give any spoken answers, (not that it's required of them as the FOS didn't ask them any questions!)
The FOS adjudicator dealing with our case has around 20 case files all over his desk, he failed to spot several breaches of the ICOBS rules that are applicable, made no mention of the incorrect information filled out in a "demands and needs statement checklist" by the senior manager of the dealership, and completely missed the fact that the PPI policy was said to cover against unemployment for a full five years - when in fact, in the most beneficial way to the customer, it would only cover against unemployment for a maximum of 39 months (as opposed to the 60 months of five year cover).
Now the fun part...
The FOS staff are said to receive a bonus for quick resolution of a case (not sure if this still applies).
The FOS judge all cases before them based on FSA guidelines and laws, with the cost charged to the "principal company"
As an accredited training company of the FSA, the "principal company" are not audited by the FSA, neither are the dealership.
So in our case, we were told by the FOS that unless we had recorded the high pressure sales patter (that lasted more than an hour, whilst we only went down to "sign for the car") the FOS could only examine the ticklists provided and make a judgement from that.
I'll put a freedom of information request into the FOS I thought, to see how many times they have found against an accredited training company ("principal company") that represent dealerships, etc, and trains company staff on behalf of the FSA (the same FSA that receive fees from the "principal company" and whose rules/laws, the FOS are saying they try to uphold) - No I won't, as conveniently, the FOS are not covered by the freedom of information act!
OK I'll ask them outright, how many times they have ruled against them... "We are not in a position to give out that information as we are not covered by the freedom of information act!"
Let's try another track, lets ask the FSA directly, how many of these "principal companies" exist, who are exempt from the FSA auditing them?
They couldn't tell me, roughly, they guessed (over two days of being asked) around 612.
Each "principal company" pays the FSA a fee and they can have anything from one to five thousand and more, "appointed representative" companies (in this case the dealership) under each single "principal company" - who of course, all pay them a fee and are again, exempt from audit by the FSA.
I checked the "principal company" involved in our case against the FSA register for action taken.
This company have hundreds of "appointed representative" companies on their books all paying fees (ie, car dealerships) and have had hundreds more on their books in the past 5 years, since the FSA legislation came into effect.
Take a wild guess how many times, during those five years (and the hundreds of companies under their protection from scrutiny), that the FSA have had to get involved with any action against the "principal company" in our case?
NOT ONE SINGLE TIME!!!!
So I contacted the FSA and asked them could they name any other accredited training company so I could check them against the FSA register... The FSA refused to do so.
Open, honest, fair, impartial?
If you have the misfortune to raise a complaint with the FOS and the company you complain against are an "appointed representative" company, of a "principal company" - then first off, don't hold your breathe, secondly, the chances of you actually having your complaint upheld (against an FSA accredited training company) are nil.
The only possible winning outcome is if you had the foresight to record the sales pitch you were given at the time, and the chances are you were told it was for something mundane, like signing a form, before they hit you with the high pressure sales pitch, so you wouldn't have been expecting it.
The financial ombudsman service are not impartial, they receive funding from companies who have a complaint raised against them, the FSA receive funding from the "principal companies" which train "appointed representative" companies on behalf of the FSA.
The FSA and the FOS cannot show that they have ever ruled against an FSA accredited company, ever.
2 comments
I too used the Financial Ombudsman to look into the Halifax plc bouncing a cheque when the funds were in the account and cost me nearly £500 in fees and interest. After 6 months waiting for a response I got the "not upholding" claim phone call.I transferred funds using the internet from one Halifax account to another. I did this at midnight and was told by the screen that the funds were transferred. The revised balance was shown and for the want of a click on a box next to the amount, a further clarification was given saying the balance included all transfers and that at this very second in time the funds to draw against was the new balance (including the transferred cash).
But the cheque, presented 9 hours later was bounced and the funds deemed to be transferred in at noon.
I had even called the banking line and been told the cheque had not en been presented yet. But it had.
The Halifax quoted terms and conditions, that cheques take 3 to 5 days to clear. The Ombudsman say this is why they are not upholding my claim.
But I transferred cash, confirmed by the Halifax as cleared funds on the screen but still the cheque I drew was bounced. The 3 to 5 days only related to a heque I would pay in. Which I was not doing.
The Halifax are bad in bouncing a legitmate cheque drawn on an account with funds, but they say they were not there but they confmed 9 hours prior , that the funds were transferred.
Am I really going mad when the Ombudsman back the Halifax?
If it is electronic, same branch, same name account holder, confirmed the balance has moved and specifically can be drawn immediately upon - and they are putting in a new system that went wrong which was the root cause but they will deny it as it will cost them presumably more than just my claim.
So how independant when the claim is against a state owned bank.
Shame on the Halifax, shame on the Ombudsman and the appeal is being written over the next 7 days.
John,The FOS seem to be suggesting that although they attempt to resolve issues to avoid things having to goto small claims court, when it comes down to it, cases that would have an excellent chance of being won in small claims are being refused.
It is a sorry state of affairs that the individual has to take a screen shot of their online banking (in your case) or record insurance sales pitches (in my case) just to protect themselves against sharp practices.
It has looked to me for some time now, that ombudsman services in all industries, alongside so called regulators, are in place only to appear to give the individual "a say" or some official body to complain to, when in fact their actual results (they are not subject to freedom of information requests remember) show that more often than not, unless there is obvious malpractice taken place, they invariably find in favour of the company being complained against.
Good luck with your appeal, although I have to say, reading your brief run through of your case, it sounds as though you would have a strong case via small claims court?
Alas, I am not a solicitor so could not advise, it is just my own personal view.
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