Introduction
The Consumer Credit Act 2006 amends the 1974 Act in order to protect consumers who buy using credit. Amongst other things, it requires businesses who sell using credit to be registered with the Office of Fair Trading (OFT).
Although the Act aims to further protect consumers, no doubt there will still be disputes. In such cases, the Financial Ombudsman Service (FOS) now had jurisdiction to resolve such disagreements.
The FOS scheme
The FOS was established to help settle disputes between consumers and financial firms. FOS can consider a wide range of financial matters - from insurance and mortgages to savings and investments. FOS is free to consumers. FOS is not a regulator of financial services firms; it is neither a trade body representing financial services firms nor a consumer champion, since it is impartial as between the parties to disputes. Its role is to settle disputes, acting as an independent alternative to the UK courts but without taking away complainants’ rights to go through the UK courts if they wish.
The purpose of Financial Ombudsman Service is to settle disputes as fairly and as quickly as possible. There are always two sides to any dispute, so it will look carefully at both sides of the story and weigh up all the facts.
How can I benefit as a consumer?
Consumers will be entitled to refer complaints (relating to an event after 6 April 2007) to FOS after they have raised the matter with the other party, usually the business they bought from. So before seeking a remedy from the FOS, you should first write to the business you think is responsible and tell them about the problem. Give them the chance to look into your complaint. In most cases, the business will have a dispute handling service which should be able to resolve the matter.
If this solution is of little consequence, you can refer the complaint to the FOS, who will resolve it in an out of court dispute resolution forum.
If you choose to refer your complaint to the Financial Ombudsman Service you must do so within six months of the issue date of ‘Final Response’ letter from the business in question.
What will the FOS decide?
It may think the business you are complaining about has treated you fairly. It may decide the business has acted wrongly and you've lost out as a result. If so, it can order the business to put things right for you. Generally, the aim is to put you in the position you'd be in if things hadn't gone wrong.
This can include telling the business to compensate you for losses of up to £100,000, however, most disputes involve much smaller amounts.
Benefits of FOS
The FOS Alternative Dispute Resolution is a good solution for a complainant because it doesn’t bind you to accept the FOS decision. If you are still dissatisfied, you can take the matter to court. The court decision is binding, this you may not then return to FOS.
What must my business do to comply?
Businesses must ensure they have an complaints handling policy and that it meets the minimum standards set out by the DISP Sourcebook, part of the Financial Service Authority’s Handbook. Businesses should also ensure that relevant changes are made to all documents to include a reference to FOS where necessary.
What can FOS do when they receive a complaint?
FOS has made certain procedural rules to enable the scheme to operate smoothly. The scheme is similar to any other Ombudsman scheme. For example, it provides for rules to be made which allow an Ombudsman to dismiss a complaint without consideration of its merits, for example where he deems the complaint to be frivolous or vexatious, and for the early stages of the handling of a complaint, for example a conciliation stage, to be handled by a member of FOS’s staff other than an Ombudsman.
FOS can levy fees on businesses to meet both the costs of establishing and running the scheme.
The Ombudsman Service can’t punish or fine businesses rather help to settle individual disputes between businesses that provide financial services and their customers.
Why choose FOS over court?
The ombudsman is a less formal alternative to the courts and it is free to consumers to bring a complaint to it. If you decide to go to court instead, you should be aware that if you lose you will not then be able to bring your complaint to it. You will also have to pay a court fee.
On average, the FOS can settle most disputes within six to nine months. And you'll always be kept up-to-date so you'll know what's happening with your case. Furthermore, you do not have to accept their decision. You are free to go to court instead, if you are not satisfied with the outcome.
The process is simple and has been designed for all to use – it is unlikely therefore, that you will require specialist help – for example, from a solicitor or claims handling company.
What to do if you are dissatisfied with a business
If you're unhappy with a financial product or service, get in touch with the business you think is responsible – and tell them about the problem. Give them the chance to look into your complaint. In most cases, the business should be able to sort things out for you.
If you are still unsatisfied then you can seek help from FOS on a prescribed form available on its site: www.financial-ombudsman.org.uk
How to refer a complaint to FOS
First, ensure you have exhausted the complaints handling policy within the organisation you are complaining about. To refer your dispute to FOS, you must do so within six months of the date of the “final response” letter you get from the business you are complaining about. The time limit may be extended or shortened if, for example:
- what you are complaining about happened some time ago and/or
- you leave it too long to complain after you know (or should have known) that there's a problem
however, you should check with the FOS first.
If you do not want to complain yourself for any reason, you can ask someone else to complain on your behalf – for example, a member of your family, a friend. However, if you are not making the claim yourself, the FOS will need your written authority for this.
The service is confidential. It does not publish the names of the businesses or consumers whose complaints are handled.
If still you feel dissatisfied, you can contact court for an alternative remedy. However, the same doesn’t work in reverse – once you have exhausted the court system, you cannot then turn to FOS.
I am a business offering purchases via credit. What help is there for me?
The Consumer Credit Trade Association (CCTA) also provides a forum for its members, which are the businesses which provide credit. The forum is called the Consumer Credit Trade Association’s Conciliation Service. CCTA attempts to reconcile the dispute between the consumer and the member.
Conciliation is a form of Alternative Dispute Resolution and a procedure which aims to provide a quick resolution to complaints and disputes between CCTA members and their customers by helping the parties decide how the disagreement can be resolved and to re-establish good relations.
CCTA Conciliation process will only come into effect once the member has been given the first opportunity to reach agreement with their customer.
In the member’s interests, where the consumer contacts CCTA direct without giving the member this first opportunity, CCTA shall refer the complainant to the member firm.
CCTA involvement will be impartial therefore it will not act for the member nor for the complainant, but will help to find a resolution to the complaint or dispute which is acceptable to both parties.
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