A friendly watchdog with sharp teeth?

How the Financial Services Ombudsman helps consumers deal with errant finance firms.

The Financial Services and Pensions Ombudsman is a consumer watchdog with teeth.

Its actions last year saw nearly 6000 people receive €5.7m in awards from errant companies.

That’s an average of nearly €1000 each.

So it can be worth your while making a complaint if you have a justified beef with a finance company.

Most cases are decided through mediation and settlements agreed before the Ombudsman has to show his teeth.

And, as our case studies show (below), they often made a speedy settlement when cases reach the investigation stage. 

Payouts of only €308,750 had to be enforced with an order by the Ombudsman.

Most settlements  - €4,271,372 – were mediated deals made through the FSPO’s Dispute Resolution Service.

And the rest -  €1,001,573 - was offered to complainants during the FSPO’s

Investigation process.

“We deal with complaints informally at first by listening to both parties and engaging with them. Much of this informal engagement takes place by telephone,” Ombudsman Liam Sloyan said.

Not surprisingly, banks were the subject of 55% of all complaints with customer service the number one gripe.

Worryingly, a third of all complaints (1015) related to disputed transactions, where customers were unhappy about how money was taken out of their accounts.

Other banking issues were “failure to provide accurate account information or balances, failure to provide security measures, non-receipt of money, and unauthorised withdrawals.”

“This marked an increase of 12% on 2023 with continuing increase in fraud and scams,” the Ombudsman warned.

Slippery insurance companies are another source of increasing consumer concern.

Problems with customer service led to a 26% increase complaints about insurers to 1,818 in 2024, mostly involving health and motor cover.

So how well do you know your consumer rights?

Our sample case studies from the Ombudsman’s reports provide an insight into when it’s really worth taking a case.

If, for example, you pay for a holiday for two and travel insurance for one, but fall ill and can’t go. Should you get refunded for all or half of the holiday cost?

And what happens when you put money in a scammers’ bank account – does his bank have to pay you back?

If your car is stolen during the night from outside your house can the insurer claim it’s your own fault because you didn’t lock it – even if you are adamant that you did?

The outcomes may surprise you!

Here’s what the Ombudsman decided in these and other interesting cases:

Karl

Karl paid for a holiday for himself and his girlfriend as a Christmas present for her.

Around the same time, he also took out a travel insurance policy in his own name. His girlfriend was not named on the policy.

Shortly before they were due to go on the holiday, Karl fell ill.

He was certified by his doctor as unfit to travel and the holiday was cancelled.

After cancelling, Karl made a claim on his policy for the full cost of the holiday.

He gave the insurance company a copy of his credit card statement showing that he had paid the full cost of the holiday for both parties.

But the insurer paid only Karl’s claim for half of the cost of the holiday as only one of the two people travelling was named on it.

Karl complained that the policy stated that it would cover the policyholder’s costs and believed he had proven that he had paid for the full cost of the holiday and, therefore, should have been paid in full by the insurance company.

Karl complained to the FSPO. When the complaint was eventually referred for formal investigation, the insurer changed its tune and offered to pay for the full cost of both holidays.

    Kate

“Kate” was woken by the Gardaí who told her that her car had been stolen from her driveway and crashed. 

Kate made a claim on her insurance. But her insurance company refused to pay her claim, saying that there was no evidence of the car being broken into and that the key was needed to start the car.

The insurer quoted Kate’s contract which stated that she was obliged to “protect her car.”

Kate disputed this saying that she always checks that her car is locked and that a key was missing from her home.

Kate said there was no discussion about how the car was stolen and she said the wing mirrors of her car would not close in if she had not locked it and she believes they were closed in. 

There was a lot of discussion in mediation about whether Kate was responsible for leaving the car vulnerable or not.

In mediation, the parties agreed to share the cost of the loss and the complaint was resolved on that basis.

Lauren

Lauren received a call from a person, who offered her an investment “opportunity.”

Lauren fell for it and transfered money to the fraudster’s legitimate bank account.

Then Lauren’s own bank alerted her to the investment scam and attempted to recall the funds she had transferred but were unable to do so.

Lauren contacted the bank with the fraudsters’ account but they did nothing and Lauren was unhappy about that.

She made a complaint to the FSPO about the bank with the fraudster’s account.

Her complaint was that:

1. It did not take sufficient action to prevent the fraud from happening. 2. failed to respond adequately once the fraud had been committed.

The FSPO didn’t investigate the complaint as Lauren wasn’t a customer of the fraudster’s bank.

Elizabeth

Elizabeth complained that her bank continually failed to send her notifications of interest rate changes, on her mortgage loan account, as required under the Consumer Protection Code 2012.

Elizabeth asserted that time and time again, despite requesting these notifications from her bank, she never received them.

She claimed there were numerous customer service failings on the part of her bank. Study

Elizabeth’s complaint was eventually sent to Investigation Services for formal investigation.

When the FSPO issued a Summary of Complaint to the bank seeking further information, it then offered Elizabeth €6,000 in full and final settlement of her complaint.

David

David made a series of bank transfers totaling over €22,000, into what he believed were ‘investment opportunities.’

But he was the victim of a scam involving a fraudulent company. He contacted his bank to tell them of the fraud.

He agreed that he had received a phone call from his bank, at the time of the first transfer of money, to warn him generally about the high risk of fraud. But David did not accept that he had been sufficiently warned by his bank.

When the bank was told about the scam, it unsuccessfully attempted a recall of David’s money.

David was unhappy that the bank had failed to return the money to his account, and he was not satisfied with the level of customer service he received.

The FSPO requested additional information and documentation.

When the bank’s answers and evidence were examined, the FSPO queried the time between David telling it about the scam, and the bank then reacting to seek a recall of his money.

When the FSPO questioned this time, the bank replied, accepting its own failings. It also acknowledged that it could have taken further steps to prevent some of David’s payments being processed.

The bank then offered to reimburse David in full, paying him €5,000.

Does the Financial Services and Pensions Ombudsman provide bang for our buck?

The FSPO has at least a clear consumer remit and powers to enforce it as our case studies show.

Other consumer agencies are a bit woolly about what they actually do to help us and tend to talk the talk rather than walk the walk.

Let’s compare what it does for us to our biggest watchdog the Competition and Consumer Protection Commission, which admittedly has more on its plate.

The FSPO costs €11m to run in 2023 with 128 staff employed.

It dealt with around 6000 cases and ensured that €5.7m was paid out to wronged consumers.

So the FSPO at least paid back the equivalent of half its running cost in payouts to consumers. And in a world of State inefficiency and complacency, that doesn’t seem that bad.

The  CCPC on the other hand operates a consumer helpline that dealt with 44,000 calls last year.

But there’s a huge difference between answering a phone or email query as the CCPC does- and thoroughly investigating a problem, taking the errant company to task and enforcing financial redress.

The CCPC merely referred on most of those consumer problems to other agencies that are far less well-funded than itself.

And for that job, and others, it costs around €20m a year to run (almost twice as much as FSPO) and employs 200 people - 72 more than the Ombudsman.

Consumer advocate Brendan Burgess, founder of Askaboutmoney (AAM) isn’t impressed with either outfit.

“Do we give credit to people for "just doing their job"?, he asks. 

Neither are some contributors to AAM impressed with the FSPO and they make their feelings known on a thread called: “The FSPO has gone to the dogs when it comes to service and turnaround times.”

Mr Burgess quoted a former employee of Britain’s financial Ombudsman:

“The FSPO is deeply frustrating. In the FOS in the UK if a case has exceeded 9 months on desk you have to explain why. Service levels are updates every month and turn around any information received in 90 days. With these guys we have to continually chase and chase and we've pretty much received the same answer today as we did last May.”

“As I said before I really feel for anyone desperately needing help.… both parties confirmed in writing that neither party had anything further to add to this case in August 2021. We appreciate that cases take time to investigate, but 3 and a half years is completely unreasonable, especially when they are now telling us it will be another few months.”

AAM is highly regarded as many financial advisors and experts contribute to the site.

Mr Burgess also cited a very straightforward case where a woman was put on the wrong mortgage rate and clearly overcharged – yet it took years for FSPO to come to a resolution.

“This case should have been settled by a junior staff member within a few weeks of it being submitted.  A one page decision should have been issued,” he claims.

“They treat all complaints the same, whether it is (one as serious in legal terms as, say, getting) a dog license or a murder.    Each gets a 15 page decision.”

Mr Burgess even claims that this policy puts the FSPO ‘clearly in breach’ of 2017 legislation underpinning the office.

He says Section 12 of this act requires that “the Ombudsman, when dealing with a particular complaint, shall act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without undue regard to technicality or legal form.”

The FSPO’s latest report shows that average waiting times are eight months in general and seven for non-tracker cases. And 84% of cases are closed within 12 months.

Mr Burgess commented on these figures: "“By comparison with other consumer agencies they are doing a good job. And 8 months doesn’t seem a bad average waiting time but I do know lots of cases that seem to be sitting there for a long time.”

So has Brendan got a point that we shouldn’t be thankful for it just doing its job?

I have to say I’m a bit like someone ‘looking for love’ who has had their heart broken so many times by dud dates that they are prepared to settle for Mr or Mrs Average when it comes to consumer watchdogs and regulators.

I’ve been disappointed for so long that I’ll gladly “settle” for what the FSPO does get right!