1、Alternative dispute resolution of financial complaints in the UK Walter Merricks chief ombudsmanDavid Thomas corporate director and principal ombudsmanFinancial Ombudsman Service,UK = United Kingdom of Great Britain and Northern IrelandEngland, Wales, Scotland and Northern Ireland,60 million people
2、1 = 200Firm = financial business,where we fit in ,Financial Services Authority (FSA),makes and polices the rulessupervises financial firmsprudential regulationconduct-of-businesssome self-regulation through codes,Financial Ombudsman Service (FOS),resolves individual disputesan alternative to the civ
3、il courtsinformal / quicker / cheapernot a regulatorsome decisions can have big effect,Financial Services Compensation Scheme (FSCS),safety netclaims against dead firmscontributions from live firms,Ombudsmen ,Characteristics citizen/consumer v state/institutiondeal with unresolved disputesfree to ci
4、tizen/consumerflexible and informal processesinvestigative procedure, characteristicswider dialogueencouraging complaint resolutionencouraging complaint prevention,Public sector ombudsmen,1967: Parliamentary ombudsman 1973: Health service ombudsman 1975: Local government ombudsman,1981: Insurance Om
5、budsman,established by industry voluntarilyin partnership with consumer bodiesindependent councilalternative to civil courtsbut redress beyond the lawbinding on firm, but not consumer,Other financial ombudsmen,Banking OmbudsmanBuilding Societies OmbudsmanInvestment Management OmbudsmanPersonal Inves
6、tment Ombudsman,FOS established by law ,a scheme under which certain disputes may be resolved quickly and with minimum formality,Disadvantages compared with courts,centralisedcannot cover third parties,Advantages over courts,free to customerdraw line for firmspecialist knowledgeinformalwe mediatewe
7、investigatefair in the circumstances,Who we cover ,26,000 financial firms ,banksbuilding societies (mortgage banks)other mortgage lendersmortgage intermediariescredit unionselectronic money institutions, 26,000 financial firms ,insurance companiesinsurance intermediariesinvestment/pension companiesi
8、nvestment/pension advisersstockbrokers, for these activities ,taking deposits, lending money and providing credit/debit/cash cardsproviding, arranging or advising on mortgagesproviding, arranging or advising on investments/pensionsproviding, arranging or advising on insurance, if they are provided,i
9、n the UKfrom the UK,We cover business done from all UK branches of:UK firmsForeign firmsWe do not cover business done from non-UK branches:even of UK firms,Complainants covered,Customers, potential customers and some othersindividualbusiness ( 200 million turnover)charity ( 200 million income)trust
10、( 200 million assets) from UK and world-wide,Complaint process ,Complainants heard about us from:,the firm 29%the press 28%our literature 13%friend/relative 10%advice centre 7%,If complainant comes to FOS and has not complained to firm,FOS refers complaint to firmissues complaint formawaits complain
11、ant contact,What requires firms to do about complaints,Time limits,after final response letter or 8 weeks (if sooner)6 months from final response letter6 years from event or 3 years from knowledge (if later)we can waive time limits in exceptional circumstances,cases,to casework,phoneenquiries,final
12、decision by ombudsman 8%,termination/mediation by adjudicator 42%,initial decision by adjudicator 50%,case,Termination by adjudicator,no reasonable prospect of successno loss/material inconveniencefair settlement on offercourt has dealt with meritsmore suitable for courtlegitimate commercial judgmen
13、t can ask for review by ombudsman,Mediation by adjudicator,evaluative mediationby agreement,Initial decision by adjudicator,initial view(paper) investigationpower to compel evidenceadjudication can ask for review by ombudsman,Review by ombudsman (appeal),request by either sideadditional evidence/arg
14、umentspossible hearing (rare)ombudsmans final decisionif customer accepts, both boundotherwise, neither is boundpossibility of judicial review,We decide what is fair in the circumstances of that case taking into account,lawregulationsregulators rulesrelevant codes good industry practice,Outcome of c
15、ases,In about 35% of cases on average we agree with the complainantBut that reflects rates of 15% to 80% depending on firm and productIn about half the cases where we agree with the firm, it had not explained properly to the complainant,Redress ,Remedy,Generally, our aim is to put the complainant in
16、 the position they would have been in if the firm had not done something wrong,We can make the firm,pay compensation up to 20 millionpay interestpay costs (rare) We can recommend more than 20 million, but the excess is not binding,We cannot make the firm,compensate other customers in similar circums
17、tances change its products, procedures or staff,Complying with awards,a firm must comply promptly with any award made by the ombudsman a complainant may enforce a money award or direction in the law courts,Workload ,Enquiries to cases (111, 000),phoneenquiries(330, 000),to casework,year ended 31 Mar
18、ch 2005 ,banking and mortgages,general insurance,other investments,mortgage endowments,pensions,securities,current inflow ,number of new cases,50% of complaints are about the 11 largest groups15% of complaints are about the 20 next largest groups35% of complaints are about the other 22,000 firms,Res
19、ources ,Staffing,1 chief ombudsman2 principal ombudsmen27 ombudsmen1,000 other staff,Cost per case,Cost,free to consumer average cost of case = 100,000firms pay yearly levy (25% of cost)firms pay case fee (75% of cost),Yearly levy,based on market sharebank pays 1 for every 2 bank accountsinsurance c
20、ompany pays 1 for every 100 of premiumssmall intermediary pays 10,000,Case fee,72,000 fee per case but first two cases per year are freeonly 7% of 26,000 firms covered pay case fees11 largest groups pay 50% of case fees,Information ,consumer enquiries 0845 080 1800 enquiriesfinancial-ombudsman.org.u
21、k technical advice 020 7964 1400 technical.advicefinancial-ombudsman.org.uk publications 020 7964 0092 publicationsfinancial-ombudsman.org.uk public website http:/www.financial-ombudsman.org.uk,Europe ,EUROPEAN UNION (EU) Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, G
22、ermany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and United Kingdom,EUROPEAN UNION (EU) Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy
23、, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, United KingdomEUROPEAN ECONOMIC AREA (EEA) European Union plus Iceland, Liechtenstein and Norway,EEA passport rightsFinancial firms authorised in one EEA member state can provide services in or
24、into any other EEA member stateFor example UK-based internet bank directed at Spain and working in Spanish,FIN-NET,financial redress body networkrefer cross-border complaintsadvise on local lawmeet six-monthly,http:/europa.eu.int/comm/internal_market/finservices-retail/finnet/index_en.htm,1998 European recommendation on principles for redress bodies,transparencydue process independence,legalityeffectiveness,Alternative dispute resolution of financial complaints in the UK Walter Merricks chief ombudsmanDavid Thomas corporate director and principal ombudsmanFinancial Ombudsman Service,
