Unjust and Unfair

Unjust and Unfair

When our fight to reclaim your mis-sold PPI meets a barrier and the banks refuse to pay up, we refer your case to the Financial Ombudsman Service (FOS). Established to promote fair practice in the financial industry, we call upon the FOS to take an unbiased approach and make a decision based on the facts.

However, an undercover investigation carried out by Channel 4’s Dispatches team has unearthed shocking failings at the FOS, and it is now believed that as many as half a million PPI cases could have been wrongly decided.

We send thousands of cases to the FOS each year. In doing so, we expect them to act as an impartial adjudicator in our disputes with the financial institutions that have mis-sold PPI to our customers. However, it seems that as a result of pressures on their workload, many staff at the FOS have been ruling in favour of the banks in order to meet their targets.

It is believed that the FOS struggled to deal with a backlog of customers that had begun to build up as a result of the PPI scandal. Some 11,000 cases fell into a “black hole”, with many not being looked at for at least two years.

Staff at the FOS were pushed to take on more cases to meet their targets, mirroring the pressures faced by those who sold the PPI policies in the first place. They were led to believe their pay and chances of progression could suffer if they failed to hit the numbers.

When asked whether it was easier to rule against complaints, an employee told an undercover reporter:

"Yeah, because you just need to make one call to the consumer, rather than trying to persuade the business, which is actually a lot harder."

We seldom argue when the FOS rules in favour of the banks. After all they were set up by parliament to protect consumers from wrong doing at the hands of their financial providers. However, it seems that the protection of consumers’ rights played no part in the decision making process for many working at the FOS – who has rejected 35% of the PPI complaints they assessed since April 2010.

Our legal advisor Mark Davies said:

"That very clear and specific problem has affected, our analysis indicates, in excess of half a million complainants."

The investigation also found that many of the staff judging cases had inadequate training – with some resorting to Google to help them gain a better understanding of the products involved. Decisions were being made in favour of the banks, without employees properly reading case files.

The FOS is answerable to the Treasury Select Committee. One of its members, MP Rushanara Ali said:

“The ombudsman needs to demonstrate that they have satisfactorily dealt with cases in the past…If they can’t do that then…members of the public will want to go back and have their cases reviewed where appropriate.”

She added:

“...They are accountable to parliament, they are accountable to the public and they'll need to explain themselves.”

If indeed cases have been wrongly rejected these need to be re-assessed. It is shocking to think that the very organisation that was established to protect British consumers has been refusing their right to redress without having read their files. It shows a lack of care for the impact, both financially and mentally, that these disputes can have on those involved.

A government petition has been launched to investigate the problems at the FOS and we urge everyone to sign it. If these allegations are correct, it goes against everything the FOS is meant to stand for. With no real accountability, consumers could be left open to further financial exploitation at the hands of the financial industry.