Following a Channel 4 investigation via its ‘Dispatches’ programme, the Financial Ombudsman Service has confirmed it will review its complaint handling structure and procedures.
The television show investigation highlighted concerns about inadequate training, experience and knowledge of ‘case handlers’.
The Financial Ombudsman Service is an unbiased, independent arbitrator, for disputes between regulated financial services companies and consumers. It is the funded by levy on finance firms, is free to consumers whilst decisions are not legally binding on the consumer i.e. you can still take the matter to court if you disagree with a ruling, its decisions are legally binding on financial services firms. E.g. if a complaint is upheld by the ombudsman and say compensation awarded of £50,000, the financial services firm is legally obliged to pay the compensation but the consumer is free to reject the decision and still pursue matters elsewhere.
As financial advisers, we respect the difficult job the Financial Ombudsman is trying to do given that they are inundated with complaints, particularly PPI mis-selling complaints running into the millions, but we have also long thought that not all case handlers have the necessary skills, knowledge and qualifications to make decisions on technical cases. It is all well and good being qualified as an arbitrator to make ‘on the balance of probability’ judgement calls, but if you do not have Chartered Financial Planner advanced pensions, tax or investment qualifications, how can you possibly have the knowledge to make a judgement on a complex case? It is a question of ‘who regulates the regulator?’
We welcome the review forced by the Treasury Select Committee and hope that the review will be beneficial for all parties i.e. consumers, financial firms and the ombudsman service itself. That said, can you guess who is going to pay for the review? That’s right financial services firms.