Research by Warwick University has uncovered evidence that FOS overinflated published information on the number of cases upheld in favour of the consumer.
The Financial Ombudsman Service (FOS) was set up in 2001 to settle disputes between financial businesses regulated by City watchdog, the Financial Conduct Authority, and their customers. As the specialist team at TLW Solicitors regularly highlight, FOS and its investigators and Ombudsmen play an important role in making sure financial mis-selling and bank negligence are scrutinised and firms are held accountable, including awarding compensation and refund payments where appropriate.
In the first six months of 2024, FOS received 133,019 complaints, an increase of 40% on the same period in 2023. The published rate of upheld cases for the first half of 2024 is 35%, down slightly from the same period in 2023.
When claims are ‘upheld’, FOS agrees with the claimant, usually an insurance, banking or investment customer who has lost out financially, rather than with the business they are complaining about. In these cases, FOS can order the financial business to pay back the money lost, compensate for the stress and inconvenience caused, and usually add interest at 8%.
What criticism has been made about FOS?
+ −New research from Warwick University looked at a selection of claims upheld by FOS (between May 2022 and April 2023), concluding that consumers are being ‘misled’ about their chances of success and that the ‘actual’ uphold rate is much lower.
The Warwick researchers highlighted that, in around one-third of the upheld cases they sampled, FOS had initially sided with the business and rejected the individual’s complaint, only to ‘pivot’ and record the judgement as ‘upheld’ at the end, but with little or no additional redress awarded.
The researchers concluded that the ‘genuine’ rate for upholds was closer to 24%, considerably lower than the published figure, and that some claimants ended up with only a small amount (£50-300) for distress and inconvenience. They also noted that different ombudsmen had different uphold rates.
What did FOS say in response?
+ −The Financial Ombudsman Service ‘strongly refutes’ the claims, saying that the research looked at just 99 cases, less than 0.5% of its total caseload that year. They argued that assuming everyone who made a claim wanted financial redress was wrong.
It also said that it was wrong to conclude that a compensation award similar to or slightly above the one offered by the financial business should not be considered upheld.
A spokesperson for FOS said:
“Each year the FOS helps thousands of people settle disputes with businesses, awarding millions of pounds back in redress and compensation… While not everyone will agree with our findings, we are committed to providing answers which are fair and reasonable.”
TLW Solicitors’ view
+ −Sarah Spruce, Legal Director at TLW Solicitors, said of the findings:
“This latest research looked at only a small proportion of the total number of cases FOS has investigated in the past couple of years, and it could be argued that the results may not be representative of the wider picture. However, even if it is a small sample, this would be a concerning pattern. We deal with many FOS claims on behalf of clients who have lost out financially, sometimes very significant sums, in a wide range of cases from bank negligence resulting in customers being scammed, to financial mis-selling claims because of unscrupulous financial advisers.
“The stats all show that FOS has recently had to deal with a massive influx of cases relating to credit complaints, motor finance, pure protection insurance, scams, banking and investments. Given the additional inevitable pressure the service is likely under, it is more important than ever for anyone considering making a complaint to FOS to have a specialist and experienced team at their side so they don’t walk away with a token offer.
“Working on a ‘no-win, no-fee’ basis, my colleagues at TLW Solicitors ensure that clients have the proper documentation and evidence needed to make a successful claim. Through years of experience dealing with FOS, the team are fully familiar with the relevant time limits and appeals processes, giving clients the best possible chances of success and recovering the compensation they are rightfully owed.”
TLW Solicitors are specialists in financial mis-selling and professional negligence claims
+ −Our specialist team can help you make an initial claim to your bank or financial adviser or take your case to the Financial Ombudsman Service. We know the claims and appeals processes, the time limits that apply, and the legal and financial jargon that is often used.
We work on a ‘no-win, no-fee’ basis and can assess your case to see if it is suitable for making a claim. If it is, we will proactively manage your case, keep you updated regularly and explain things in an easy-to-understand way using jargon-free, plain English.
Get in touch
+ −If you, a friend, or loved one has suffered financial loss and are thinking of making a complaint to FOS, please contact us for a confidential, no-obligation conversation to explore your options.
Telephone 0800 169 5925, email info@tlwsolicitors.co.uk, or complete one of the forms below.
It is important to get advice as soon as possible, as strict time limits can apply.
Minimum claim values apply.
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