March / April 2008
With 26 May 2008 now set as the date when the new Consumer Protection from Unfair Trading Regulations come into force, consumers and the financial services industry may wonder how many more definitions of fairness (or unfairness) they need to be familiar with - and whether this new definition is likely to affect the ombudsman service's handling of complaints.
The short answer, so far as we are concerned, is not much. The vast majority of the complaints we see are either about what we call "maladministration" - or they turn essentially on the legal position between the two sides to the dispute.
The maladministration complaints range from errors in bank or pension statements to the serious mishandling of insurance claims. A surprisingly large number of disputes arise from the simple failure of a business to note people's change of address.
Analysing the legal position, as part of our consideration of a financial dispute, usually means looking at the terms and conditions of the contract - whether it's a bank account, a mortgage agreement or an insurance policy. Complaints about mis-selling are essentially about the legal obligations of advisers, under professional negligence law. Of course, the rules of the Financial Services Authority (FSA) - where they apply - embody these obligations. But in judging a dispute, we apply pretty much the same criteria as a court of law would do.
What about the FSA's principle of Treating Customers Fairly, the "unfair relationships" test under consumer credit legislation, and the Unfair Terms in Consumer Contracts test- Well, in fact it's not often that we actually need to analyse or apply these in relation to the disputes we see at the ombudsman service.
So back to the imminent new regulations which, from May, will ban a commercial practice that contravenes requirements of "professional diligence" and that "materially distorts the economic behaviour" of a consumer. I'm sure financial services businesses will want to look at the regulations - but I'd be surprised if we wind up with many complaints that turn on them.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.