How to make use of the FOS

The Financial Ombudsman Service exists to resolve disputes between consumers of financial services products and authorised firms. It is intended to be an informal and accessible alternative to litigation and is provided free of charge to complainants. Authorised firms are bound by FOS rulings on complaints.

Only private individuals and businesses with an annual turnover below £1m can complain to the FOS. In addition, the complainant must be, or have been, a customer of the respondent firm.

The FOS considers what is 'fair and reasonable' in any case, rather than the strict legal rights and wrongs of the situation. What is fair and reasonable in any given situation may depend upon the law, relevant regulations, applicable codes of conduct and generally accepted practices in the particular business area.

A complaint can only be made to the FOS after the authorised firm has gone through its own customer complaints handling systems. Also, the complaint must be made to the FOS within six months of the authorised firm giving its own final response to the complainant.

Initially, the FOS will see if there is any reasonable prospect of settling the dispute by way of mediation, for example. If this is not possible, the FOS will investigate the complaint and give a provisional assessment.

This sets out a recommended outcome and the reasons for it.

**** If the parties accept this the matter ends there. If not, the FOS will issue a final determination. The process of reaching the final determination is an informal one, with no rules of evidence or need for any hearings.

If the complainant accepts the final determination it will be binding for both parties. Complainants can, however, reject FOS findings and proceed with litigation instead. Respondent firms may not reject FOS decisions.

The FOS can award compensation for financial loss, pain and suffering, damage to reputation, distress or inconvenience. The maximum binding compensation it may award is £100,000. It can also make non-binding recommendations that the firm pays a larger sum. The FOS can also direct a firm to take specific steps in relation to the complainant as it considers 'just and appropriate'.