Ombudsman News Issue 91 - Financial Ombudsman Service

ombudsman focus:myths and truths about theombudsman servicemythThe way the ombudsman is fundedis unfair – and consumers shouldhave to pay.truthAll ombudsman schemes in the UK –from the Parliamentary Ombudsman to thePrisons and Probation Ombudsman –are free to consumers. And this was adefining feature of the ombudsman schemesestablished by the financial services industryitself back in the 1980s – and the modelon which we are based.80% of our funding currently comes fromcase fees, so it is based on the number ofcomplaints businesses actually have with us.At £500, these case fees are much less thana business would have to spend if theircustomers pursued legal action throughthe courts, rather than bringing theircomplaint to us to settle.The first three cases that a business has eachyear are ‘free’. So over 95% of the businesseswe cover don’t pay any case fees.The case fee is payable whatever the outcomeof the case. If we charged a case fee only if weupheld a case, the fee would have to be muchbigger in order to cover all our other costs.And it might then look like we had a financialincentive to uphold complaints.Where we don’t uphold a case, it doesn’tautomatically mean the consumer was wrongto have complained. We see many caseswhere a clear, helpful and sympatheticexplanation by the business – rather than adefensive and legalistic response – wouldhave resolved misunderstandings andprevented the complaint in the first place.December 2010/January 2011 – page 22