Champion fighting for your financial rights

Armed with 1,600 staff and a budget of 98.4m, the Financial Ombudsman Service (FOS) is a statutory, not-for-profit organisation with a

commercial focus which seeks to be as fair as possible.

The FOS was set up under the Financial Services and Markets Act 2000 to help to resolve individual complaints between consumers and businesses providing financial services as a quicker and more informal alternative to the courts.

Its remit has recently been extended to cover virtually every aspect of personal finance. It now ranges from hire purchase and insurance broking to spread-betting and e-money.

If a business cannot resolve a consumer's complaint, the FOS can step in to try to settle the dispute but the firm has to first have a chance to correct the situation.

It does not handle non-financial matters. For instance, Otelo is the telecoms ombudsman.

In March, Natalie Ceeney, 38, was appointed chief executive and Chief Financial Ombudsman. A former NHS administrator and strategy consultant for McKinsey, she became director of operations and services at the British Library and in 2005 chief executive of the National Archives.

Ms Ceeney succeeded Walter Merricks, who was Chief Ombudsman for 10 years.

A few weeks ago, the FOS received its millionth case. Perhaps not surprisingly, Ms Ceeney has announced that one of her priorities is to re-examine the business model used for the first decade. "We are now operating on a far larger scale than ever envisaged at the outset," she says, revealing that the average workload has increased 20 per cent every year.

In the past year, the FOS has:

n Resolved a record 166,321 disputes – a 46 per cent annual increase – resulting in compensation for consumers in 50 per cent of cases;

n Handled 925,095 consumer enquiries, which is over 3,500 each working day and a 17 per cent annual increase.

To place the businesses involved in context, 52 per cent of cases related to four of the largest financial services groups whilst 2,259 firms had one complaint each.

Last year 61 per cent of complaints were against banks, 11 per cent general insurers and eight per cent life insurance and investment product providers. Only two per cent each related to building societies and independent financial advisors.

The service is free to consumers. The FOS is funded both by an annual levy on the businesses covered and by case fees where they are involved. As an incentive, no case fees were charged on a firm's first three disputes last year.

Customers of over 100,000 businesses that provide financial services have the statutory protection of the FOS. This includes 80,000 firms with a standard consumer credit licence issued by the Office of Fair Trading and banking, investment and insurance companies regulated by the Financial Services Authority.

Research for the Yorkshire Post shows that the number of complaints in Yorkshire and Humberside is rising rapidly: 9,542 in 2008 to 11,935 last year and already 7,498 this year.

Nationally, new complaints were broadly split 44 per cent banking and credit, 42 per cent insurance and 14 per cent investments and pensions.

More specifically, the top five reasons to complain were for payment protection insurance (30 per cent), current accounts (15.5 per cent), credit cards (11 per cent), mortgages (4.5 per cent) and unsecured loans (4 per cent).

This was mirrored in our region with the top three complaints:

n Payment protection insurance: 3,498 in 2008, 4,735 last year and 4,331 this year;

n Current accounts: 1,132 in 2008, 2,584 last year and 1,288 this year;

n Credit card accounts: 1,771 in 2008, 1,649 last year and 928 this year.

One new development is the excessive time taken by some providers to transfer an ISA to another firm. While the regulations specify 30 days, the OFT has proposed half this time which the industry has agreed to implement by the end of the year.

If a saver currently finds the transfer period exceeds 15 days, the OFT urges referral to the firm and then to the FOS with the prospect of extra interest for the period of delay.

The FOS is not obliged to follow case law or legislation but aims to decide on the basis of what is fair and reasonable. It seems very ready to accept that a bank has acted correctly even when it patently has not.

As an example, a bank advised a follow-on rate for a maturing cash ISA, asking for acceptance well before the deadline and placing the weasel words that rate changes may need to be checked.

The bank in question then magically reduced the rate! It made no such contact with the investor, expecting them to check. The FOS took months to handle such a simple matter and amazingly decided in favour of the bank.

The FOS gives the impression that it is swamped at times. It takes six months to resolve 67 per cent of complaints. A former adjudicator said there was undue pressure to complete cases with bonuses not paid if the targeted number of cases was not closed.

With only a one-day induction course, the same source said financial terms were misunderstood.

An independent financial advisor at Yellow Tail Financial Planning said he had to explain the difference between initial fees and establishment charges.

Non-FOS staff are outsourced from firms like Hazell Carr but required to work at the Ombudsman's offices.

The approach taken to resolve a dispute is largely determined by the individual facts of each case and by the level of formality required to settle matters. The FOS prefers to resolve matters informally – getting both sides to agree at an early stage to the views or informal settlements that their adjudicators suggest.

More complex or sensitive disputes may require detailed investigations and lengthy reviews. If unhappy with an adjudicator's decision, appeal to one of the 56 ombudsmen. Last year the FOS upheld 50 per cent of cases, down from 57 per cent the previous year.

Its eight-strong board is headed by Sir Christopher Kelly, NSPCC Chairman and former permanent secretary at the Department of Health.

Contact: Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR; tel 0300 123 9123.