The Financial Ombudsman

[Theophilus H]

A pal of mine who works there said they have just lost a court case. Apparently the creditor refused to pay the fee because the FOS admitted the complaint was totally without foundation. The FOS sued the creditor and lost. They had to pay almost £3k in Court costs as well.

 

The judge said it was wrong for a Govt. body to charge a fee when the creditor had done nothing wrong. See his point. I mean the OFT are saying a £25 fee for bouncing a cheque is wrong because that is not the true cost, which is fair enough, so is a bit hypocritical to consider £450 a fair fee for some jumped up clerical nobody to write a couple of letters!

 

Apprently this has spread like wildfire and although they are publicly saying they will appeal, they may not as they fear another loss and their little empire comes crashing down. They have fat salaries and nice offices to maintain so they want to keep this very quiet.

 

Does anyone else know about this? Couldnt see in mentioned here.

[lickthewallfatboy]

A pal of mine who works there said they have just lost a court case. Apparently the creditor refused to pay the fee because the FOS admitted the complaint was totally without foundation. The FOS sued the creditor and lost. They had to pay almost £3k in Court costs as well.

 

The judge said it was wrong for a Govt. body to charge a fee when the creditor had done nothing wrong. See his point. I mean the OFT are saying a £25 fee for bouncing a cheque is wrong because that is not the true cost, which is fair enough, so is a bit hypocritical to consider £450 a fair fee for some jumped up clerical nobody to write a couple of letters!

 

Apprently this has spread like wildfire and although they are publicly saying they will appeal, they may not as they fear another loss and their little empire comes crashing down. They have fat salaries and nice offices to maintain so they want to keep this very quiet.

 

Does anyone else know about this? Couldnt see in mentioned here.

 

 

mmmmmmm

 

I would really like to see details of the "case"-I can't see the FOS taking on and pursuing a "court case" if they felt the complaint was without foundation in the first place-allied to the fact that a complainant is not restricted from bringing a case him/herself regardless of what the FOS decide.The FOS investigate and come to a conclusion-they do not,as far as I'm aware,take cases to court on complainants' behalf.......

 

I was also under the impression that creditors do not have a choice when it comes to paying the FOS fee......

 

 

interesting

[Theophilus H]

Just phoned my mate, it was 'Trowbridge County Court'.

 

The creditor does not have a choice in the legislation. They simply REFUSED to pay the invoice FOS sent them! Rather than writing it off the FOS issued a summons thus resulting in a Court appearance...and a humiliating loss.

 

I must admit I find it very funny whenever our utterly useless Govt/Civil Service get egg on their faces.

[tomterm8]

Just phoned my mate, it was 'Trowbridge County Court'.

 

The creditor does not have a choice in the legislation. They simply REFUSED to pay the invoice FOS sent them! Rather than writing it off the FOS issued a summons thus resulting in a Court appearance...and a humiliating loss.

 

I must admit I find it very funny whenever our utterly useless Govt/Civil Service get egg on their faces.

 

Well, in that case it was an unreported case... no doubt the F.O.S. will appeal. The law is really quite clear on who is liable for the F.O.S. fees, and no doubt the F.O.S. will win as LONG as the CCA 2006 is not contrary to european law.

[lickthewallfatboy]

a quick guide to funding and case fees

 

why should the business pay a

case fee if the complaint isn’t

upheld?

Our rules (set out in FSA’s Handbook) say

that if we consider a complaint against a

business, the case becomes chargeable

whatever the outcome.

Many of the decisions we make do not

result in a clear-cut “winner” and “loser”.

And because of our focus on mediation –

settling disputes informally on a “no blame”

basis – we are able to resolve many

complaints without needing to apportion

right and wrong.

Arguing whether a case fee should be

payable in cases like these would only

increase costs all round. And if we only

charged case fees where the consumer

clearly “won”, the fee would have to be

much higher (to cover our costs of dealing

with all the other cases).

[Theophilus H]

Will they win though? The judge knew the law when he made the decision. Presumably he must have researched legislation? He clearly thought this 'law' went against 'natural law'?

 

Must say I agree. It does seem pretty stupid that a fee is payable by someone FOS admit was an innocent party! Lets be honest, the real reason they wanted to set up this organisation was to create jobs and fat salaries for 'the boys and girls' at the ministry.

 

What with constantly losing personal data, then this, the old fines and costs must be racking up! Doubtless taxes will be raised to compensate...

[tomterm8]

Will they win though? The judge knew the law when he made the decision. Presumably he must have researched legislation? He clearly thought this 'law' went against 'natural law'?

 

Must say I agree. It does seem pretty stupid that a fee is payable by someone FOS admit was an innocent party! Lets be honest, the real reason they wanted to set up this organisation was to create jobs and fat salaries for 'the boys and girls' at the ministry.

 

What with constantly losing personal data, then this, the old fines and costs must be racking up! Doubtless taxes will be raised to compensate...

 

Yes they will win. the law is very clear. County Court judges often get things wrong... that is why there are Appeal courts.

[tifo]

The judge said it was wrong for a Govt. body to charge a fee when the creditor had done nothing wrong.

 

The FOS is not a govt body, it is a private firm ....

[ScarletPimpernel]

Looking at FOS' annual report for 2007, their unit cost for an investigation is £484. Unlike the banks, they are not making a disproportionately high profit from their charges (or indeed any profit), and they explain how they've arrived at the figure.

 

It's also worth remembering that if banks and other financial institutions complied with the law and regulatory obligations, there would be no need for an ombudsman - FOS was instituted only because the finance sector fails so spectacularly to either treat its customers properly, or regulate itself.

[Theophilus H]

What about cases where a complaint is raised which has absolutely no validity?

 

Would you trust figures provided by ANY Govt. Dept? There is no way a civil servant writing a few letters costs £484 unless you are paying them a fat salary. Though I suppose they have to fund their gilt edged pensions somehow.

 

FOS was created for the same reasons this Govt. has created so many other quangos and civil service positions. Jobs for the boys funded by our taxes.

[Killerschick]

Here's the details as reported on moneymarketing.co.uk. Be aware that it's very much from the industry perspective!

 

Court puts bite on watchdog

 

Nicole Blackmore - 28-Feb-2008

A county court judge has echoed what many advisershave said for years, suggesting it is unfair for advisers to pay a case feeif a misselling complaintis rejected.

Since the Financial Ombudsman Service was created, advisers have been arguing strongly that firms should not suffer a financial penalty when they havenot committed any wrongdoing.

Now Judge Mark Rutherford at Trowbridge county court has ruled that the FOS's practice of charging firms for the cost of dealing with complaints that are rejected to be "unfair in principle and in practice".

Judge Rutherford said:"No reasonable public body would maintain and enforce such a rule."

The FOS brought the case against husband and wife IFA team Dolly and Brian Pickering who run Chippenham IFA Heather Moor and Edgecomb after the couple refused to pay four case fees of £360 each.

FOS spokeswoman Emma Parker says the service will appeal against the decision and insists that firms are obliged to continue to pay their case fees, regardlessof the outcome.

The ombudsman service was ordered by the court to pay £2,812 in costs. But law firm Shakespeare Putsman partner Gareth Fatchett says until the appeal is heard, advisers should refuse to pay fees when their case is rejected.

He says: "I would advise FA firms who are being asked to pay the case feeto refuse and ask for the matter to be referredto court."

Fatchett adds that whileit is widely known thata county court decision does not set a precedent, firms should not ignore the judgment.

He says: "It is at county court level but it is not a reason to do nothing. The case obviously would not be heard in the high court because the value is only a few hundred quid."

Fatchett says in previous cases he is aware of, when advisers have contested paying case fees, the FOS has backed away from this type of courtroom confrontation because it was worried about the implications of losing.

He says: "They are not collecting tens of thousands of pounds, they are collecting little pieces of money and I think that is a problem for them. It is not economic and that points to the argument that people should be able to attack it and say we are not paying."

He says the FOS was claiming a big sum from one of his clients and when it became clear that the firm was willing to go to court, it settled without prejudice and withdrewthe claim rather than pursuing the case.

Aifa deputy director general Fay Goddard is cautious, suggesting that advisers should continueto abide by the current structure. She says if the appeal is upheld, it may cause a radical overhaul of the way the FOS is funded.

Goddard says: "You have to remember that most complaints are not upheld. If you have a situation where only if you lose the case the fee is payable, you would have to revisit the whole funding structure."

The eventual appeal findings may settle the matter but there is doubt over how long it will take for the FOS to secure a hearing.

Compliance consultant Adam Samuel says the FOS is unlikely to be grantedan expedited hearing within the next 12 months because it was found tohave wasted a May 2007 court date.

It was ordered to pay £2,727.55 in costs after failing to disclose documents in sufficient time, causingthe original hearing to be abandoned in May 2007.

Samuel says: "This sort of sloppiness is pretty unforgiveable. I doubt that the FOS will be ableto secure an emergency hearing in the Courtof Appeal."

He says the FOS needs to explain publicly why it wasted the hearing in May and incurred the costs.

He says: "This raises issues of public accountability because other firms are effectively paying this.It is also not a great way to endear oneself to a judge. This type of behaviour is jeopardising the interests of FOS fee-payers."

Samuel warns that if the FOS were to change its payment structure so that firms only pay for cases that are upheld, many small firms could be worse off.

He says: "Does the industry really want tohave the FOS incentivised to uphold complaints, even if by just suggesting a further £20 for distress and inconvenience?

"A significant leap in the case fee could do significant damage to small firms.A £1,200 fee in the event of losing a case would place huge pressures on firms to concede marginal cases."

But Highclere Financial Services partner Alan Lakey describes the ruling as "a victory for common sense over mindless bureaucracy".

He says: "These small victories are gradually turning back the clock tothe pre-FSMA days when the various ombudsman bodies had to comply with British law and the onus was onthe complainant to provean allegation."

The issue of perceived unfairness was also heightened last week when Money Marketing revealed that the FOS only finds an average of 10 cases a year out of 100,000 to be frivolous or vexatious, meaning the adviser escapes the fee.

Parker claims this is due to the initial screening process which weeds out86 per cent of complaints.

But Lakey says the process can only cull complaints that are very obviously unreasonable, and consumers can easily ensure their complaint is investigated which means that the adviser is hit with a case fee. He says: "The secret is just to get the FOS to look at a complaint and that can be done by wording it in such a manner that they cannot dismiss it at the initial stage."

[ScarletPimpernel]

I work with the military, and thus have first hand experience of the untrustworthiness of government departments, and the New Labour lickspittles who run them.

 

However, the FOS is not, as has been mentioned already, a government department; it is an independent organisation. It follows that their staff are not, therefore civil servants.

 

If you take some time to read the FOS Annual Report, and other infor on its website, you will see that they do not charge for every case. They may not investigate some cases at all, and they do not charge for every case they do investigate. It's worth noting that the reporting period does not include any cases undertaken since FOS became responsible for investigating complaints against DCAs. One can only imagine that in the case referred to above it was found prima facie, that there was a potential case to answer, and so an investigation took place.

 

Looking at the details of the case above, it seems that the protagonists were IFAs and not a DCA; and, as Killerschick says, it's written from an industry perspective.