about this
issue of
ombudsman news

by David Thomas
principal ombudsman banking & loans division

Until 30 November 2001, we continue to deal with banking and loans cases under the rules of the Banking Ombudsman Scheme and the Building Societies Ombudsman Scheme. But from 1 December 2001, when the majority of the Financial Services and Markets Act 2000 comes into force, we will deal with them under the new rules of the Financial Ombudsman Service.

The almost-final text of those rules was published by the Financial Services Authority (FSA) in June 2001, in Consultation Paper 99. The final rules, approved by the boards of the FSA and the Financial Ombudsman Service, are likely to be published in early October. These are unlikely to contain any surprises.

Under the transitional provisions, firms are likely to have up to eight weeks (until 26 January 2002) to issue final response letters on any unresolved complaints already on hand when the new rules come into force.

The Financial Ombudsman Service covers some financial services that are not regulated by the Financial Services Authority. So banks and building societies need to consider the position of each corporate entity in their group.

Where the complaint is about events that occur after 30 November 2001:

Corporate entities that will be authorised by the FSA (as deposit-acceptors, insurers or investment firms) will be covered automatically by the Financial Ombudsman Service’s compulsory jurisdiction. This includes their regulated activities and certain unregulated activities (such as credit cards, loans and mortgages) – unless they certify to the FSA that they do not deal with retail customers for any of the activities covered by the Financial Ombudsman Service.

Corporate entities that will not be authorised by the FSA (eg credit-card, loan or mortgage subsidiaries that do not accept deposits) will not be covered by the compulsory jurisdiction, even if they are currently members of the Banking Ombudsman Scheme or the Building Societies Ombudsman Scheme. They will need to apply to join the Financial Ombudsman Service’s voluntary jurisdiction.

Although the rules will change, the nature of the complaints is likely to stay much the same. Many of the relevant topics are covered in this issue of ombudsman news. We:

summarise our approach to complaints about endowment mortgages where the endowment policy is missing;

report briefly on the present position concerning dual variable rate mortgages;

deal with some issues concerning downgraded deposit accounts;

give a progress report on TESSA complaints; and

provide a range of case studies illustrating complaints about administrative problems, disputed cash machine withdrawls, and rediscovered old passbooks.

I am grateful to my colleagues for putting this edition together, and to our readers for their useful comments on previous editions.