© Dan Mitchell

Consumers have every right to complain about the UK’s sprawling collection of ombudsmen that cover industries from banking and finance to energy, property and even furniture.

After all, they exist to ensure we get a fair deal and are there to arbitrate on disputes. Yet, increasingly, they stand accused of serving consumers badly.

The majority lack legal powers to enforce decisions, while some are suspected of favouring the businesses that fund them.

In some sectors, different schemes compete for complaints-resolving business, adding to the confusion for consumers, who do not know where to turn. Often, those with unresolved complaints are unaware that they can take their disputes further. The high number of rejected complaints from the dispute resolution services shows that the correct message is not getting through, leading to more misery for dissatisfied consumers.

Even the Financial Ombudsman Service (FOS) — often regarded as the gold standard for ordering companies to pay billions in payment protection insurance compensation — came in for severe criticism this week. Undercover reporters for Channel 4’s Dispatches programme showed some staff to be ignorant of their briefs and prepared to take short-cuts to clear their backlog of cases.

Responding to the programme’s findings, the FOS said: “The impression given is clearly not representative of us at our best and we will be taking any concerns raised in it seriously. Our people are committed to doing the right thing and we always want to know how we can improve.”

FT Money has studied how many complaints the separate services receive, reject and resolve — and reports on how politicians and consumer campaigners would like to see the complaints process shaken up.

Failing consumers

Ombudsman services are supposed to resolve complaints made by consumers against commercial businesses or public bodies — although they are not regulators. Redress can also be provided through alternative dispute resolution services (ADR) following a 2015 European directive.

Most are funded by their members, leading some critics to perceive that they favour the companies that pay their bills.

All are expected to use expertise, independence and impartiality to resolve disputes — yet very few have the weight of the law behind them.

They have a long heritage. Sweden appointed a parliamentary ombudsman in 1809 to redress the imbalance of power between the citizen and the state. In the 1960s, Britain followed suit, giving UK citizens the ability to complain about unfair decisions made by central government departments. The concept has since expanded to cover all consumer-facing industries.

However, there is a general groundswell for reform. In November, Martin Lewis, founder of MoneySavingExpert.com, declared there were “too many ombudsmen with too few powers”.

The report he authored, commissioned by the All-Party Parliamentary Group on Consumer Protection, said many ombudsman services were so ineffective they should be stripped of their right to use the title. It also argued that those that fulfil their true purposes often lack the legal power to enforce their judgments.

“Substantial reform needs to happen in the sector to give consumers confidence that when they hear the word ombudsman, it’s somewhere they can go to get a fair hearing and to make sure that companies comply,” Mr Lewis said.

In February, Sajid Javid, the communities and housing secretary, announced an eight-week consultation into whether there should be a single housing ombudsman to cover the entire market. He had earlier said: “This could drive up standards across the whole industry and increase protection for customers.”

Ombudsman Services Property, one of three dispute resolution schemes covering property letting agents, estate agents and surveyors, said it would no longer offer “a broken solution to a broken market”. It will stop accepting new cases on August 6.

Lewis Shand Smith, chief executive of Ombudsman Services, said the Property Ombudsman should be given statutory, or at least binding, powers to ensure that companies are forced to abide by its rulings.

Competing for complaints

Consumer Dispute Resolution Limited is an umbrella organisation offering ADR services spanning retail, communications, utilities and aviation. Ofgem recently launched a consultation on whether it should also be able to provide services in the energy sector, as this competes with the government-underpinned Energy Ombudsman.

In Doncaster and Kent, local councils are offering ADR services to help consumers, adding to the confusion about where consumers should take their complaints.

While the FOS can force banks and other financial companies to pay compensation to consumers, membership of many other ombudsman schemes is not compulsory and these services have no legal power to ensure compensation is paid.

Baroness Altmann, the former pensions minister, has called on the government to review the ombudsman and ADR sector urgently, saying that while there were overlaps between services, cases often fell between them and left consumers with no one to complain to.

Reacting to this week’s Dispatches programme about the FOS, she said: “The public would be horrified to see such incomplete attention being given to their complaints, when so often people spend hours and hours putting their information together.”

Nicky Morgan MP, chair of the Treasury select committee, has written to the FOS asking for answers to the allegations “that there is a potential bias to decide in favour of a bank because it led to an easier path to closing a case”.

In response to the programme’s findings, the FOS said it had resolved more than 1.4m payment protection insurance (PPI) complaints and upheld two-thirds of these in favour of the consumers.

Political punch

The consumer green paper, announced last spring and expected to be published in coming weeks, should give the government the opportunity to protect the interests of consumers with greater enforcement powers for ombudsmen and ADRs.

When he announced it, Philip Hammond, the chancellor, said it would protect consumers and take steps to give regulators greater enforcement rights against companies breaking the law, allowing them to “take tough action against firms that mislead or mistreat consumers”.

Citizens Advice has criticised the fact that businesses in many sectors can decide whether or not to take part in dispute resolution schemes.

Airline Jet2.com announced in January that it was not going to join any aviation ADR scheme, and was subsequently criticised by the Civil Aviation Authority. “As a matter of law, participation in ADR is entirely voluntary, and this is recognised and accepted by the CAA,” the airline said in response. “If entering into a scheme is optional, it is wrong for someone to be criticised for not entering into it.”

Citizens Advice has called on the government to enforce ADR schemes by law, and also said that multiple schemes competing with each other meant that consumers’ needs were not being met.

Online dispute resolution platform Resolver.co.uk says this is evidenced by a dramatic fall in the number of cases being referred to ombudsman services in certain sectors.

“There are lots of ADRs, many of which have different powers when it comes to what they can do for consumers,” said James Walker, Resolver’s chief executive and founder. “We always try to refer consumers to a free service that will help them. There is a real need for a standard model across all industries. There should be a legal requirement for all companies to pay into a scheme.”

Not all services publish lists of who their members are, making it very difficult for consumers to find the correct route for dispute resolution.

For example, consumers trying to escalate a complaint via the Retail ADR website may see this message: “The retailer that you have entered is NOT in our database. You may continue to register your complaint but as we do not know if the retailer will engage with us, we are unable to say whether we will be able to resolve your issue.”

It is not surprising, therefore, to find that in the organisation’s latest annual report it reported receiving 39,459 UK complaints, yet only accepted 4,661 of them.

Consumers unhappy with the adjudications of ombudsmen and ADR services can take their cases to court. But there is no body for consumers to complain to about ombudsmen or ADR services if they are tardy, negligent or appear to be biased.

Pester power — a guide to complaints services

When approaching an ombudsman or alternative dispute resolution service, you must show evidence that you have filed a complaint with the organisation you are in dispute with. Typically, they will only look at your case if the dispute has not been resolved after eight weeks — and you must choose the right body to provide redress.

These are free services. The threat of referral to them is often enough to keep businesses or organisations honest. Often a telephone call or an email query is all that is needed for a problem to be resolved.

Consumers do not have to accept the adjudication of an ombudsman. If a business refuses to implement their rulings, the consumer can still use the ruling to start court proceedings.


The Financial Ombudsman Service (FOS) is a statutory body whose decisions are enforced by law. Contacted by more than 1.3m people in the year to March 2017, it dealt with 321,283 complaints about banks, insurance, payment protection insurance (PPI), loans, mortgages and pensions. Of these, 43 per cent were upheld


The number of complaints handled by the Financial Ombudsman Service in the year to March 2017

It can award up to £150,000 plus interest and costs. Membership is compulsory for firms regulated by the Financial Conduct Authority. Some 56,000 companies are members of this redress scheme, but more than 50 per cent of complaints last year concerned just four groups — Lloyds, RBS, HSBC and Barclays.

This is because PPI claims still dominate, with more than 168,000 new cases last year, although questions were raised this week about how well these are being dealt with.

Another statutory body, the Legal Ombudsman handles disputes with solicitors, barristers and claims management companies.

Last year, it was contacted by 64,932 people, and accepted 7,223 complaints. It resolved 91 per cent of these. It can order legal practices to pay up to £50,000 in compensation plus interest and unlimited costs, and about 60 per cent of cases are resolved in less than 90 days.

The Legal Ombudsman tries to negotiate a resolution. If this fails, it then rules on the case. Consumers received financial remedies in 49 per cent of the negotiated cases last year, and a further 24 per cent received fee-related remedies. Compensation was less than £1,000 in 63 per cent of cases.


The Pensions Ombudsman deals with problems concerning UK occupational and personal pensions and its findings are enforceable in court. In the year to March 2017, it handled more than 6,000 inquiries, an increase of 22 per cent on the previous year, and investigated 1,333 cases.

The average time taken to resolve a dispute is 10 months. Some 33 per cent of cases decided formally by the ombudsman were upheld or partly upheld in favour of the customer. The complaints are mostly about pension maladministration, but disputes about pension fund transfers and the clawing back of overpayments have both increased. There is no limit to the value of the awards.


Energy customers, who have been in dispute for over eight weeks or who have received a “deadlock letter” from their supplier, can complain to the Energy Ombudsman.

Last year, most large and medium-sized energy companies resolved an average of 90 per cent of their 3.5m annual complaints themselves.


The number of customer complaints against large and medium-sized energy companies last year

The Energy Ombudsman received 88,255 complaints, but only 54 per cent were within its terms of reference. Some 10 per cent were rejected because more than nine months had elapsed after the complaint was raised with the supplier. Just over half of resolved cases were upheld in favour of the customer. While the ombudsman can order a payment of up to £10,000 in compensation, the most common award was £100.

Ofgem has also launched a consultation on whether Consumer Dispute Resolution Ltd, which runs the Retail ADR, formerly the Retail Ombudsman, should provide services in the energy sector, competing with the government-underpinned Energy Ombudsman.


The Communications Ombudsman deals with complaints about mobile phone contracts, landlines, broadband and pay TV — but not cable television services.

The separate Communications and Internet Services Adjudication Scheme (Cisas) is the alternative — which one to use depends on your supplier.

The ombudsman received 99,103 initial contacts in 2016, but fewer than half were within its terms of reference, or about member companies. Of the 29,503 cases resolved, 43 per cent were upheld in favour of the consumer and the average payout was £50.


Ombudsman Services Property will stop taking on new cases after the government announced a review of the system.

The Property Ombudsman, Property Redress Scheme, Housing Ombudsman Service and Local Government and Social Care Ombudsman will continue to take on new cases.

In 2016, The Property Ombudsman (the largest of the redress schemes) received 14,218 inquiries of which just under 25 per cent were resolved formally. Of the cases it resolved, the ombudsman found in favour of 73 per cent of complainants.


The Motor Ombudsman is a government-approved dispute resolution body, with 7,500 members covering new cars, vehicle sales, warranties, service and repair. The maximum award is £10,000 or the value of the vehicle.

Car sales account for 40 per cent of complaints, with defects at delivery being a major issue. Of cases resolved in 2016, 40 per cent were upheld for the consumer, 50 per cent for the businesses and 10 per cent had a mixed outcome. Businesses are bound to comply with its decisions, and the organisation says there are no cases of non-compliance.

Passengers wanting to complain about airlines will find that some are members of alternative dispute resolution schemes run by Aviation ADR and CEDR, while others are dealt with by the Civil Aviation Authority.

Aviation ADR received 4,534 complaints in the year to April 2017. Most related to claims for compensation for delayed or cancelled flights or lost luggage. It refused to deal with 501 claims.

Moving house? If something goes wrong, you could try the Removals Ombudsman. Its annual report showed it received 90 claims and made 10 determinations. Those it rejected included 54 about non-member companies and 10 concerning insurance.


Formerly known as the Retail Ombudsman, Retail ADR deals with complaints about member companies, including supermarkets, department stores, book shops, hotels and gyms.

In the year to May 2016, it received 60,283 complaints, but nearly 40 per cent were not within its jurisdiction — largely because they related to non-members. Of the cases it accepted, it upheld for consumers 43 per cent of the time. Members are legally bound by the adjudicator’s decision and failure to comply could lead to termination of their membership. It says that to date it has had 100 per cent member compliance. The maximum it can award is £25,000

The Furniture Ombudsman deals with complaints about furniture makers and sellers, covering 8,000 retailers and traders. Although it can make financial awards, it cannot insist that a retailer delivers goods that they have not delivered. In 2016, it dealt with 5,903 disputes and resolved over 99 per cent of cases.

The Consumer Ombudsman, which deals with a range of issues including faulty goods, poor service and shoddy workmanship, received 7,915 complaints in the year to June 2017, but only accepted 339 of them because the vast majority of firms complained about were not scheme participants. Most of the cases it dealt with involved disputes about repairs.

This article has been amended to clarify that Ombudsman Property Services is no longer taking on new cases from August 6, not The Property Ombudsman as previously stated.

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