Financial Ombudsman
IntermediateA financial ombudsman is an independent body that resolves complaints between consumers and financial services firms, free of charge to consumers, as an alternative to going to court.
Financial ombudsman schemes exist in many countries. Consumers usually must first complain to the firm. If they are unhappy with the response, or the firm does not respond within a set time, they can take the complaint to the ombudsman.
The ombudsman investigates, considers what is fair and reasonable in the circumstances and can order the firm to put things right, such as paying compensation. Decisions are typically binding on the firm if the consumer accepts them, while the consumer can usually reject the decision and go to court instead.
Examples include the Financial Ombudsman Service in the United Kingdom, set up under the Financial Services and Markets Act 2000; the Australian Financial Complaints Authority; and the Ombudsman for Banking Services and Investments in Canada. In India, the Reserve Bank of India runs an integrated ombudsman scheme.
For example, a customer who believes their bank wrongly refused to refund an unauthorised payment could ask the ombudsman to review the case.
Ombudsman services are usually funded by the firms they cover. Their decisions can also highlight widespread problems, such as the mass mis-selling of payment protection insurance in the UK.
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