The Financial Ombudsman Service is designed to offer an independent assessment of a consumer’s complaint against a financial institution or adviser. This service is offered to consumers and small businesses and requires people to set out their complaint in writing. It then offers the financial institution the opportunity to respond before the ombudsman service reviews the matter and provides a written decision on whether they believe the complaint is justified.
The Financial Ombudsman Service can order the financial institution to pay up to £150,000 as compensation for loss suffered. As a consumer, you have the choice as to whether you accept the decision of the ombudsman service (at which point the institution will be bound by it), or reject it. If you reject the decision, you can still pursue the financial institution via legal proceedings.
Challenging Financial Ombudsman Service decision
A recent case that was decided by the High Court (Angela Lenderink-Woods v Zurich Assurance Ltd and others [2016] EWHC 3287 (Ch)) arose from a situation where the consumer rejected the decision of the ombudsman service and decided to take legal action against the financial institution. In this case, the judge overturned the original decision of the Financial Ombudsman Service deciding that the Ombudsman had made incorrect assumptions about the tax implications of financial products and so had been wrong in finding against the consumer. The Court ordered the Defendant to pay damages of £223,000 suggesting that, even if the Financial Ombudsman had found in the consumer’s favour, she may still have been wise to reject the award as her loss exceeded the ombudsman’s upper limit.
The Financial Ombudsman Service undoubtedly offers a valuable service to consumers in many situations but this case provides a reminder that it is not always right. If you are in a similar situation having taken your complaint to the ombudsman, it may be worth seeking legal advice on the strength and value of any claim before choosing whether or not to accept their decision.
How can Nelsons help?
For more information, please contact our Professional Negligence team on 0800 024 1976 or via our online form, and we will be happy to assist.