More of the same deceitful incompetence from the FOS
I have lately spent nine months corresponding with the Financial Ombudsman Service and achieved an adverse result (in my opinion I have been improperly debited by a broker for c. £100,000). I was surprised by this since mine is a slam dunk case. So I have asked around and in particular I got the following comments from a chum of mine from school days who was for many years a partner in one of the big City law firms. I asked him what the control of the FOS is:
“It is set up by statute – hence the lark that its decisions are subject not to a real right of appeal only to judicial review – a weak process used to challenge decisions by government/statutory bodies, which does not look into the facts; it just looks to see if due process was followed, and that the decision is not wholly unreasonable. The FOS is funded by the banks and reports to the FCA and to Parliament.”
However, it gets far worse. I asked my chum for further details as to the modus operandi of the FOS. He remarked:
“The FOS is a creature of the financial institutions. Evidence:
- The FOS says its process is paper driven. Yet from my wife’s complaint, after I had asked for the FOS’s file, the FOS would have called the financial institution for explanations of the complaint, presumably so giving the financial institution a chance to whisper in the ear of the FOS as to the line the financial institution wishes the FOS to take;
- Inspection of the FOS’s fact sheet “Funding and case fees” says that the FOS charges a financial institution £550 for each complaint the FOS looks at and rules on. This is hardly an incentive for the FOS to look at anything remotely complicated. Hence its superficial view of my wife’s complaint. This superficial view is simply wrong: it does not appear that the FOS have even read her complaint, which is not that complicated or long;
- The same fact sheet refers to the funders of the FOS’s services (the financial institutions) as its “customers” – he who pays the piper calls the tune.
- The real purpose of the FOS service is clear from the fact sheet – “…[the FOS costs] much less than the legal costs… involved in [a financial institution] defending a claim in court, WHERE THE PUBLICITY COULD BE FAR MORE DAMAGING TO THE FINANCIAL INSTITUTION’S BOTTOM LINE”.
The FOS process appears loaded to support the financial institutions and is in need of a thorough overhaul.”
When I received the FOS’s final judgement I could not understand why there had been no review of vital facts and their consequences in law. Indeed the “ombudsman” kept on saying the he “thinks” that such and such is so. And there I was imagining that what matters is a knowledge of the law as applied to the facts.
I think that the following case clearly demonstrates that the FOS are not bound by the principles of law: http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=79737
Despite having accepted categorisation as an experienced high net worth investor and signed an execution-only instruction letter in respect of the investment in question, the claimant still managed to successfully sue his adviser in respect of an unregulated property investment he had purchased.
The FOS is effectively an arbitration service not a court of law and they behave accordingly. I submitted a case to them (£40000 involved) which was legally absolutely clear cut in about 2002 when Walter Merricks was in charge. The place was an absolute shambles, with incompetent staff who appeared to be mainly failed insurance company claims clerks with not the slightest knowledge of the law. My case, about a mishandled pension fund, first languished apparently in their banking sector for 6 months without anybody doing anything. It took 4 years and 192 pages of correspondence from my side alone (presumably some 600 pages in all) with over a dozen different “adjudicators” and four “decisions” against me (and the law and all the evidence) before at last I was able to have it referred to a top ombudsman (in those days happily a lawyer) who found in my favour on all counts. I had the advantage of having dealt with legal cases in the City for 30 years but it was very frustrating. I know a leading QC who gave up. They have now (disgracefully in my view and arguably not in accordance with the intention of the statute setting up the FOS) given over 400 staff (about one in ten) who were really little more than team leaders the title of “ombudsman” so that they can, in terms of the legislation, deliver a final verdict. Happily from the consumers’ point of view the ombudsman’s decision is not binding and it does not rule out going to court.
This is what happens when you have law making by rule books and adjudication by unaccountable bureaucrats without independence.
Most people can not afford to use the law for redress. There must be a middle way with a quasi-legal tribunal, staffed by experts, without the high cost of a court claim.