Ombudsman points to rise in small claims

Consumers fighting for compensation of smaller sums

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Consumers have been fighting for financial compensation for increasingly small sums, indicating a growing reluctance to accept poor deals and service.

The Financial Ombudsman Service (FOS), which deals with unresolved disputes between financial service providers and customers, says it has seen a jump in the number of cases involving involving sums as low as £500.

“There has been a hardening of attitudes from both consumers and financial businesses over the last year,” said Emma Parker, the FOS spokesperson. “This has led to an increasing number of complaints involving relatively small amounts being resolved by a formal decision by an ombudsman.”

Figures provided to the Financial Times by the FOS show a huge rise in the number of complaints made in the last year relating to low-value claims.

Complaints concerning credit broking, where a business agrees to find a loan on behalf of a consumer for a fee, rose by 78 per cent in 2010 from the previous year. Loans complained about were typically worth £50-£70.

The number of cases regarding specialist insurance, usually for sums below £500, rose 64 per cent last year compared with 2009.

Disputes over small claims for travel delay or disagreements over small items lost on holiday, and complaints over contents insurance for small items, are also being more keenly fought by both sides.

A handful of cases relating to insurance of less than £50 were logged. The FOS says that disputes of this size would, historically, have been sorted out between the consumer and financial business at an earlier stage.

Taking a dispute to the ombudsman can be time consuming. Unhappy customers must first contact the company they believe has treated them unfairly, then wait eight weeks for a response.

Only then can they take their case to the ombudsman, but not before they have collected dates, times, sums paid out and records of letters and conversations. These must be collated and sent in, along with a form detailing the claim.

But as the UK’s economic situation has deteriorated and households have become more cautious with their money, consumers have become more determined to get their money back, whatever the sum involved.

Small claims occupy about 2 per cent of the total cases received by the ombudsman, which finds in favour of around 70 per cent of consumers who complain.

The FOS said it was receiving a record number of small sum cases, many relating to the sale of payment protection insurance.

But it said some insurers were digging in their heels, even on claims involving small amounts, which was increasing the time it took to resolve these disputes.

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