The Financial Ombudsman Service is a name used by the national financial dispute resolution services in the United Kingdom and in Australia. Although these organizations differ in some respects, they share a common purpose. Both the UK and the Australian services were created to help resolve disputes between consumers and financial service providers.
The types of financial service providers covered by the ombudsman service include banks, insurance companies, finance companies, investment firms, and financial advisers. The types of complaints the financial ombudsman service addresses include banking, credit cards, mortgages and loans, pensions, investment accounts, stocks and bonds, money transfers, and financial advice. The financial ombudsman services, in all of these cases, are given free of charge to consumers.
Before an ombudsman service will accept a case, the consumer is expected to raise the issue with his or her financial services provider. If the consumer is unsuccessful at this stage, the financial ombudsman service will step in and act as mediator between the parties in an attempt to reach a solution. The vast majority of disputes are resolved in this manner.
If settlement cannot be achieved through negotiations or mediation, the financial ombudsman service will take the matter under advisement. After careful consideration, the ombudsman is then expected to make a decision that represents a fair and reasonable resolution of the dispute. During the ombudsman’s review of the case, certain factors must be examined, including relevant law, regulations, applicable regulator’s rules, regulator’s guidance and standards, codes of practice and best industry practices. Some disputes are resolved within a few months, while others may take over a year.
If a consumer is happy with an ombudsman’s decision, the ruling will become final and enforceable in court against both of the parties — the consumer and the financial services provider. If the consumer rejects the decision, his or her legal status remains the same, as if he had never brought the problem to the financial ombudsman service. At this stage, a consumer is free to move ahead and file a lawsuit, if he so chooses.
The UK’s Financial Ombudsman Service organization grew out of the UK’s Financial Services and Markets Act 2000. Pursuant to this law, the UK’s service covers any and all UK-based businesses providing financial products and services. The UK’s service receives nearly one million inquiries each year and resolves over 150,000 disputes each year.
Australia’s Financial Ombudsman Service organization falls under the authority of the Australian Securities and Investments Commission. It is the country’s single, national dispute resolution service for consumers and small businesses who are dealing with banking, investment, and insurance transactions. The Australian service addresses issues involving credit cards, life insurance, investments, managed funds, stock brokerage, and pooled superannuation trusts, to name only a few.
While the UK’s service extends to all UK financial businesses, the Australian service extends to those financial service providers who are members of the organization. Membership in the Australian Financial Ombudsman Services organization, however, is open to any financial service provider conducting business in Australia.