The Financial Ombudsman is a service set up by the government to settle disputes between financial institutions and their customers. They act as an unbiased moderator, looking at complaints ranging from insurance problems to loans to mortgages, and everything in between. There are Ombudsman services in 80 countries around the world, though some are more successful than others. They seem to be very successful systems when it comes to fairly solving these disputes; however it does create quite a divide between the financial accountants and their clients.
Clients of the Financial Ombudsman in the UK pay no fees when they make a complaint. Instead, this fee is charged to the financial institution in question which has caused a bit of a riff, and even sparked some legal actions amongst some firms. On the other hand, the Financial Ombudsman streamlines the process of resolving complaints for the consumers. Too often, complaints go by unnoticed by some firms, or the consumer has to jump through flaming hoops to try to get their issues resolved. By making the firm pay a fee for every complaint, they are more likely to take a harder look at the issues and do what they can to resolve it, at the risk of losing even more money.
Obviously consumers are very pleased with the services provided by the Financial Ombudsman. Last year, the number of complaints increased by 9 percent, receiving almost 2,357,374 consumer inquiries and about 512,167 new complaints . Their numbers have been steadily increasing for the last five years, proving that more and more people are becoming aware of the services that the Financial Ombudsman offers and are taking advantage of these services, instead of letting financial institutions take advantage of them. Just this month, the Financial Ombudsman helped a family who’s house was flooded in 2012 receive full payment from their insurance company. Their insurance company claimed that the house was underinsured because the original assessment of the house’s worth was inaccurate. Thanks to the Financial Ombudsman, who sympathized with the family saying that they were probably given false information when first appraising the house and shouldn’t be penalized for that, they insurance company is now paying in full for all repairs, provided that all they are given all the receipts .
For those that still have their doubts, just take a look at the media. People are constantly complaining about how they have done everything they can to resolve their issues with financial institutions, only to fail time and time again. You see the angry tweets, the Facebook rants, and if a consumer is lucky, you can read about their issues in the paper or hear about it on the news. Issues always seem to be resolved quickly once the media is involved and starts to make firms face their customer service problems publically. While the ombudsman isn’t flashing headlines all over the news when firms fail to resolve complaints, they resolve issues quickly, easing the frustration of clients and getting them answers.
To be fair, there are also frustrations on the part of the financial firms, especially small financial firms that are being charged for the complaints. Those fees can rack up. The simple answer would be to improve customer service so that complaints are dealt with in a timely manner, and maybe then the ombudsman wouldn’t have to get involved. There was also the endowment incident, when so many financial institutions were selling endowments to people that weren’t necessarily qualified, and then anyone who had an endowment tried to be compensated for it, regardless if they knew the risks involved or not beforehand. While this isn’t necessarily fair on the customer’s part, financial institutions as a whole shouldn’t be handing out endowments like candy, and they need to suffer the consequences when they break the rules.
The Financial Ombudsman isn’t perfect either. There have been plenty of complaints in the media about the ombudsman, either about delayed responses or not agreeing with how they dealt with the situation. However, the Financial Ombudsman has done a lot more good for its clients than bad. There may be some situations where they can’t help. Sometimes there are time constraints or they simply can’t help, but they are very up front it. They provide lists of the types of complaints they can successfully help you take care of on their website and if you aren’t sure if they can help you or not, you can always get in contact with a representative at the company who can give you answers right away .
The most recent annual figures show that credit card complaints have decreased by 47% in the past year. However most other complaints were on the rise. There were about 2,360,000 initial inquiries or complaints filed. That comes to about 8,000 complaints a day and 1 out of every 5 became a dispute. Problems with payment protection insurance sales account for 78% of all the new cases for the past year, rising 6% from last year. They set a new personal record, resolving 518,778 cases, and 58% of consumers received compensation for their complaints . Overall, they had a very successful past year.
U.S. citizens, fear not. There are plenty of Ombudsman services in the States as well. Most are set up within specific federal authorities, although they operate independently from them in order to stay unbiased. The Consumer Financial Protection Bureau is just one of many Ombudsman programs that have been set up. While not as widely known or used as the Financial Ombudsman in the UK, the CFPB is also working to make customer complaints heard free of charge. In 2014, the U.S. Ombudsman experienced a bit of drop in clients. There were 1,133 individual inquiries in 2014 and 1,422 in 2013. This lack of inquiries can be explained by a drop in customers that reached out to the service. Nothing a little advertising and word of mouth can’t fix. Inquiries to the Ombudsman included various topics. About 41% were questions, 36% complaints, 14% topics of concern and 8% other inquiries . Complaints were down from 201, however questions and topics of concern were up, meaning more and more people are starting to get comfortable with how the Ombudsman operates and may be more willing to use them their services if they have complaints in the future. Most complaints made are concerning mortgages, but they also handle credit product issues as well as other financial issues. Ombudsman services in the States aren’t nearly as popular as those set up in the UK, but they are offering mostly the same services and do their best to help those customers that reach out for help.
The CFPB Ombudsman has even set up services for students. Private student loans don’t have the same rules attached as federal student loans do. This means if you need a take a temporary payment break during a financial emergency, the lender may or may not allow it. Now, the CFPB Ombudsman can help. They will handle complaints ranging from billing issues to payment breaks, and if you file on their website, you should hear back within 60 days . You have to be prepared that you may not get the answer you are looking for, but if you really need help, the CFPB will do what they can to get you that help.
The Financial Ombudsman isn’t a perfect company, no matter the country it’s located in, but then again, neither are most financial service companies. They offer free services to customers who are feeling like their voices aren’t heard. Services range from a variety of industries including credit card problems, mortgage issues, and complaints against private student loan companies. They are successful in helping consumers take action against the unfair and unacceptable customer service that some financial service companies provide.