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ombudsman news

issue 15

March 2002


Regular readers will know that the banking and loans division has four case-handling teams comprising an assessment team and three investigation teams.

We thought it would be helpful to tell you a little more about each of these case-handling teams, and how they approach their work. In this issue of ombudsman news we start, as most cases start, with the assessment team. In future issues, we will deal with the investigation teams.

where does the assessment team "fit in"?

The assessment team is not the beginning of our process for handling complaints. That starts with our colleagues in the customer contact division who receive complaints direct from customers. Where customers come straight to us without first having raised their complaints with the firm concerned, the staff in the customer contact division pass the complaints on to the firm to deal with. In many instances, we hear nothing more - because firms and their customers are able to sort out their differences themselves.

But sometimes firms and customers reach stalemate. This occurs when the firm issues a "final response" letter that the customer does not accept, or when the firm has taken more than eight weeks to look into the complaint. In these circumstances, when we receive the complaint (provided it isn't clearly outside the rules governing what we can deal with) it is converted from an "enquiry" into a "case". It's then passed to the relevant division. Cases sent to the banking and loans division usually go straight to the assessment team. But before we get into the detail of what the team does, let's have a quick look at who's in it.

who makes up the assessment team?

There are 15 case-handlers - called "caseworkers" - in the banking and loans assessment team. They all have very different backgrounds; some have worked in the financial industry, some are lawyers, and others are complaint-handling professionals who have worked in the customer relations departments of household-name companies. As you'll see from the photo of the team on the front cover, there's also a wide age range - from mid 20s to early 50s.

what does the assessment team do?

In the early days of ombudsman schemes, everything was built around the ombudsman's decision - in other words, the end of the process. But when the case-handling process for the new Financial Ombudsman Service was being put together, we decided to turn things around. Our role is to resolve as many cases as we can, just as soon as we can, only passing on for an ombudsman's decision those cases that cannot be resolved in any other way.

Most customers and firms want an early resolution. A formal decision is not what's wanted, or needed, in a great number of cases. So our focus has shifted. Instead of automatically undertaking a detailed investigation into each case, we look at whether there are any ways in which we can resolve the case quickly and fairly without the need for a detailed investigation, which can sometimes be quite a long-drawn out process. The former Banking Ombudsman Scheme had already started to move in this direction.

This is where the assessment team comes in. It acts as a kind of filter - receiving complaints from the customer contact division and exploring a variety of ways to try and resolve them at this stage - only passing on those which really cannot be settled properly except by a full investigation.

how does it do this?

The first thing to remember is that the caseworkers in the assessment team are problem-solvers, not investigators. That's not to say that they don't look carefully at the details of the case - they do. But they don't duplicate the important investigation work done by the adjudicators in our three investigation teams. Instead, they check through the case papers, focusing on the following areas:

  • jurisdiction
  • early termination
  • mediation.

Under Financial Ombudsman Service rules, jurisdiction issues are much narrower than they used to be under the rules of the old schemes. They are limited to whether the firm is covered, the activity is covered, the customer is covered and the complaint is in time.

Most of these issues are fairly clear-cut and are dealt with by the staff in our customer contact division when the complaint first reaches the ombudsman service. But there can be some grey areas, particularly over time limits. So these grey areas of jurisdiction are issues for a caseworker in the assessment team to decide - though both customers and firms can appeal to an ombudsman if they disagree.

early termination

Many issues that the old scheme rules treated as jurisdiction issues are now treated as matters of procedure - the whole area of "early termination" is a prime example of this. Essentially, it means that the Financial Ombudsman Service has discretion to stop dealing with a complaint in certain circumstances. The rules specify 17 grounds for early termination - some of which are used more frequently than others.

A typical example is where the firm has offered as much as we could ever see a complaint being "worth" - assuming we were to accept everything the customer has said about what happened. There would be no real point investigating such cases because, even if we upheld the complaint, we could not award any more than is currently "on the table". So we give the customer a choice - either to accept the offer or to take alternative action against the firm.

Some customers are reluctant to accept such an outcome. They can, of course, always appeal to an ombudsman and occasionally the ombudsman comes to a different view. But this doesn't happen often - largely because the caseworker has already put a lot of time and thought into considering what the customer has said.


This means exactly what it says. Typically, a caseworker will receive a complaint where the two parties are still quite a way apart and will then try to bring them together, using the knowledge and experience of how similar cases have been settled in the past.

Often, the underlying issues are not in dispute - the parties are just unable to agree on how the firm can best put matters right. But if the assessment team caseworker can't bring the parties together by acting as a "‘go-between", we won't force a settlement. The caseworker may, however, negotiate quite firmly or add a fairly clear recommendation.

passing cases on for investigation

Of course, the assessment team cannot resolve all the cases it receives. Some can only be resolved fairly by an investigation and a formal decision. But the percentage of banking and loans cases that need to be passed on for investigation is small compared with the number the assessment team receives from the customer contact division. For every hundred cases in, the assessment team resolves almost eighty.

what's the team's caseload like?

Inevitably, it's a wide and representative cross-section of the complaints we receive - ranging from a single simple issue to a series of complex issues that have arisen over an extended period of time. Business banking complaints, for example, often fall into the second category.

At the moment, the assessment team is handling more than 2,000 cases - but these are not spread equally amongst the caseworkers. That is because the figure includes about 900 "hot topic" cases (such as dual variable mortgage rates - mentioned elsewhere in this edition). These 900 cases are "parked" with a small number of caseworkers, pending the outcome of lead cases. The December 2001 edition of ombudsman news, shows how we deal with "lead" and "follow-on" cases. Across the assessment team as a whole - caseworkers are normally dealing with about 80 cases each at any one time.

how can firms help?

In two main ways:

  • by understanding the role of the assessment team; and
  • by co-operating with our caseworkers - especially when they ask for information.

Firms should react promptly when they receive a letter from our customer contact division saying a complaint is being passed to the assessment team. That letter details the sort of basic information that is always needed in a particular type of complaint and asks the firm to provide the information.

Firms should also respond quickly if the assessment team caseworker subsequently requests additional details. This won't happen for every case. Our caseworkers are not in the business of asking for papers just for the sake of it - they only ask for as much information as they need to try to resolve a case. And sometimes a caseworker will conclude that - with just a bit more information from the firm - there will be a reasonably good chance of settling the complaint. A speedy response from firms helps everyone, because settling a case is often a question of timing - leave it too long and the will to reach agreement can quickly evaporate.

If you have any questions about the assessment process, just contact our technical advice desk:
phone 020 7964 1400 or email

but what's it actually like being a caseworker?

Peter Bristow (pictured centre front of photograph), tells us about his work as a member of the banking and loans assessment team.

Peter's been an assessment team caseworker for about two and a half years. He joined the old Banking Ombudsman Scheme after working for a high street bank for about 15 years. He has a general law degree and a master's degree in public law.

What attracted you to becoming a caseworker?

A number of things, really. I'd worked for the bank for quite long enough when I decided to go back to studying full-time. At first I had ideas of becoming a solicitor. But after I'd seen at first hand what that was likely to involve (particularly in the early years) I decided to wait until I'd got my degree and then see what else was on offer.

What finally made your mind up?

Partly being in the right place at the right time, but also because I had a strong feeling of wanting to do something worthwhile. Something that was for the public good, I suppose - to help see justice done. Very few lawyers in private practice get the chance to do that as much as we do in the ombudsman service. Finding something that meant I could blend my banking and legal knowledge in the same job seemed ideal.

Describe a typical day in your working life.

The easy answer is that there isn't really a typical day - every one is different. But to do the job properly you need to be pretty organised - there are so many complaints coming through, particularly at the moment. If I tell you how I spend my time on Tuesdays and Wednesdays each week, that might give you a fairly good idea of how things work.

I tend to devote Tuesdays to reading all the new cases I've been allocated. That needs concentration. I find it easier to get to grips with my new cases by locking myself away with just a pile of files for company (away from the phone and the emails). I make notes about each case, and I always make a point of coming to a decision about what I think should be the next thing to happen on each of them - even if that's just to say I'm in two minds, and need to ask someone else!

Who do you ask - colleagues, or one of the casework managers?

It can be either - but that's a part of what happens on Wednesdays. There are times when I'm pretty sure what to do with a case but I need just to get hold of a final piece of information, or to check that I've understood things properly. So my first job of the day is usually to pick up the phone - to firms or to customers.

Quite often, this is also the time when I ask firms if they're prepared to make - or increase - offers to try to mediate complaints. We find we generally have much more experience in resolving complaints through mediation than the smaller firms, or those who are relatively new to the Financial Ombudsman Service. So we often have more of an idea of what any particular complaint might be "worth" - in the sense of what would be a reasonable way to settle the matter - and one which would be readily acceptable to the customer.

Are firms generally receptive to this idea- Or do they see it more as unwelcome meddling - especially since all these complaints will have reached the end of the firm's in-house complaints procedure-

Well, that depends. Bearing in mind that all the complaint-handling departments of the firms we deal with are, essentially, doing the same job, it's surprising how different their approaches - and reactions - can be. But, in the main, once a firm understands that our approach is simultaneously impartial and pragmatic - and takes into account similar cases involving other firms (which, obviously, they won't have seen) - then it all tends to work out well. Mediation is one of our real strengths. Every day the assessment team solves a large number of cases this way.

All that must take up quite a bit of time.

Yes, but it varies according to the type of cases I have. It certainly takes up much of the morning - at least until it's time for my regular weekly meeting with my casework manager. That tends to be very much a two-way discussion. I don't discuss every case. But I may need to get a second opinion on cases I'm in two minds about, or just to bounce ideas around. The point of our discussion is to come to an agreement about how to deal with the case in question, so we don't stop until we've done this. That can sometimes take a fair while.

But you can't solve every case, can you- There must be some that need a full investigation.

Yes but it's a pretty small proportion. Our guiding principle is to try to get the earliest possible fair resolution in each case. Almost 80% of the cases passed to us from the customer contact division are closed, for one reason or another, in the assessment team.

But back to my Wednesday schedule. After my case discussion, I go back to trying to settle complaints. Some of this is done by phone - but by this point in the day I usually find I've got the more complex cases left. The most appropriate way of dealing with them is generally by letter.

This is also when I deal with cases that fall within our "early termination" criteria - the ones that, for one reason or another, shouldn't go any further. More often than not cases reach this stage when - following our intervention - firms agree to offer at least as much as we would ever award at the end of a full investigation, assuming we accepted everything the customer says.

There'd be no point our investigating those cases. Even if we found entirely in favour of the customer, they'd not get more than is now on offer. All this needs to be explained to the customer pretty carefully. People often get the wrong end of the stick and think we're preventing them getting their "right" to a full investigation. They don't always realise we're doing them a favour - recommending they get full settlement now rather than later.

All that makes for a very full day. Challenging - but usually very rewarding, too. To round things off - and in case you think I've not got much left to do for the rest of the week - there's always lots more letter writing and a lot of post arriving in response to enquiries I've made (and, with luck, a few accepted settlements too).

a selection of cases

To round off this focus on case-handling, here's a selection of cases that our assessment team caseworkers have considered recently, and which have been:

  • decided as being outside our jurisdiction;
  • concluded by early termination; or
  • settled by mediation.

case study - case decided as being outside our jurisdiction


Mr and Mrs V used to run a business. It got into financial difficulties in the late 1980s and, in 1991, the firm called in the loan with more than £300,000 outstanding. According to Mr and Mrs V, that decision by the firm caused their business to "go under". They had used their house as security for the loan so they ended up losing that as well as their business and their livelihood. Shortly after all this happened, Mrs V had a nervous breakdown.

Mr and Mrs V had complained bitterly to the firm at the time about what it was doing. But it was not until late 1996 that they felt able to challenge properly its decision to call in the loan and to ask some serious questions about the way
it did so.

The firm consistently maintained that it had done nothing wrong and, in early 2001, Mr and Mrs V turned to us. They claimed £100,000 (the maximum we can formally award). They explained that, although their problems clearly had their roots in the events of 1991, they had not really started pursuing their complaint until several years later.

Our rules say that we cannot usually look into a complaint where the events complained about happened more than six years before the matter was first referred to us. When the complaint arrived in our customer contact division, it was not immediately clear whether 1991 or 1996 was the right starting point. So the complaint was passed to our assessment team for further consideration.

After questioning Mr and Mrs V, the caseworker decided that - even though she understood why Mr and Mrs V had delayed pursuing the matter until 1996 - they had clearly had concerns about what the firm had done as far back as 1991. So that was the date from when the clock had started ticking. It was ten years before they came to us so their complaint was "out of time".

Like the courts, we cannot deal with cases once they are too old. Memories fade and relevant documents may no longer be available so many years after the event. No one is required to keep papers forever and it can be very difficult to establish what did actually happen some years earlier. Mr and Mrs V asked for a review of the caseworker's view. When the ombudsman looked at the complaint, he agreed with the caseworker's conclusions. It was clear that Mr and Mrs V's complaint centred on the firm's decisions about lending and security back in 1991. Mr and Mrs V had known about these decisions - and been unhappy about them - at the time. But they had delayed bringing their concerns to the ombudsman scheme for 10 years.

Mr and Mrs V then turned to their MP - a high-profile former minister. He wrote to ask if we could bend the rules in this case. The ombudsman explained that we have no power to do that.

case studies - cases concluded by early termination


Mrs C was on a very low income and the firm would not lend her the amount she wanted to buy a car. It would only make the loan if she took it out jointly with her husband.

Mr C readily agreed to this and the loan was set up in the joint names of Mrs C and Mr C - in that order. The couple also agreed to take out the firm's loan protection insurance to cover the loan.

Several months later, Mr C died suddenly and unexpectedly. Mrs C put in a claim under the loan protection insurance but this was turned down on the grounds that only Mrs C, as the first-named person on the loan, was covered. Mrs C turned to her solicitors for help, but they didn't get anywhere with the firm so they came to us on her behalf.

The crux of Mrs C's claim was that she said the firm had failed to bring to her and her husband's attention the significance of her being the "first name" on the loan. Had the firm done this, the couple would unquestionably have set up the loan the other way around, because Mr C was the main breadwinner.

However, immediately above the signature boxes on the loan agreement form, the firm had clearly spelled out that, if the insurance option were taken, only the first-named person on the loan agreement form would be covered. The couple had either not read or understood the significance of this clause at the time, or had not thought it was likely to be relevant - particularly because the car was to be a second car, mainly for Mrs C's use.

We pointed out to Mrs C, through her solicitors, that the firm had not been under any duty to point this out to them orally, but it would have been under a duty to reply accurately if they had asked a question about the insurance option. There was no evidence that the couple had asked any questions about it.

Although we sympathised with Mrs C's position, we really didn't think that the firm had done anything wrong. So we confirmed to her solicitors that her complaint had no reasonable prospect of success and that, therefore, we would not be considering it any further.


On 4 April 2001, Mr B asked the firm to transfer £3,000 from his current account to his maxi-cash ISA. But the firm didn't do this - it actually made the transfer the other way about. By the time Mr B spotted what had happened, it was too late for the firm to make a correcting transfer because, by then, a new tax year had started.

Mr B told the firm that, because of its error, he had lost the tax benefit of the ISA "in perpetuity". He claimed compensation of over £10,000. The firm accepted its error and the consequent need to make sure Mr B did not suffer a loss. However, it offered him only £3,500, mainly because it didn't agree with his method of working out the loss.

We concluded that the firm's way of calculating compensation was more appropriate than Mr B's. But we suggested that the firm should add something for the inconvenience its error had caused him. The firm increased its offer to £4,000, which we thought was reasonable. After we explained our overall thinking to Mr B and told him we couldn't see any way that he was likely to get more than that, he accepted.


Mr K was on holiday in Madeira when he signed up for membership of a holiday club on the island. He signed a credit card voucher for the local currency equivalent of £3,000 to pay for the membership. However, two days later, he decided the membership wasn't very good value for money. He asked the holiday club to cancel his membership and give him his money back.

Although the club said it would cancel the membership, it didn't give him his money back. So when he got back to the UK he asked the firm for help. But the firm told him it wouldn't give him his money back either, because he had signed a "cash withdrawal" voucher. The money had been withdrawn from his card account in cash on the day he signed the holiday club membership agreement.

Mr K argued that he had not withdrawn the money in cash. However, when he was shown a copy of the voucher he had signed, he saw that it was clearly marked as a "cash withdrawal" (even if, as seemed to be the case, he hadn't gone to the bank himself to get the money).

But, added to that, the reason Mr K wanted his money back was not because there had been any misrepresentation about the holiday club, or anything wrong with the deal he had signed up for - he had simply changed his mind about the purchase. Because of this, we told Mr K that he didn't appear to have a valid claim against the firm under Section 75 of the Consumer Credit Act 1974. Albeit with some reluctance, Mr K accepted that.


Mrs S had a credit card with the firm. Monthly payments to the card account were taken by direct debit from her current account with a different firm.

In June 2001, the credit card firm mistakenly took three times as much as it should have done under the direct debit. It was Mrs S who spotted what had gone wrong, but she felt it took the firm far too long to sort things out - even though, in doing so it gave Mrs S the extra money back, plus interest, and offered her £50 compensation. However, Mrs S described the £50 as "pathetic" and she brought her complaint to us.

We felt that Mrs S had certainly been messed around a bit, but nowhere near as much as she claimed. We suggested that the firm should increase its offer to £200 and it readily agreed. Mrs S accepted the £200 after we explained that, in our view, it was the most her complaint was "worth".


The firm did not think that N Limited was conducting its account properly. So, after several warnings, it gave N Limited 28 days' notice to close the account. At the same time, the firm cancelled all standing orders and direct debits on the account.

N Limited objected - on the basis that the firm's terms and conditions for business accounts said that it would give 30 days' notice in such circumstances. In response, the firm extended the notice period for N Limited by another two weeks, giving six weeks notice in total. However, when the firm did finally close the account, it made an error by closing it a couple of days before the end of the extended notice period.

N Limited complained again, saying that the firm had been inconsistent and unclear about its intentions. It also said that the firm's arbitrary cancellation of the standing orders and direct debits had resulted in its not realising that its phone bill had gone unpaid. The first that N Limited knew of the problem was when it received a red reminder from the phone company. Added to that, the firm had sent N Limited a cheque for the closing balance of the account, made out incorrectly. N Limited demanded significant, but unquantified, compensation - which the firm countered with an offer of £200.

When the matter was referred to us, we felt that N Limited's claim was rather over-inflated. Nevertheless, the firm had made a number of mistakes. We felt that while £200 was probably a bit on the light side, £350 was the maximum we would ever be likely to award N Limited at the end of an investigation, even if we found entirely in its favour on all aspects of the complaint. The firm readily agreed to increase its offer to £350. So we told N Limited that since there was nothing more we could do, if it did not wish to accept the increased offer, the alternative was to take the firm to court. It opted for the £350.


Mr L had a credit card account with the firm, with a limit of £3,000. In May 2000, with the balance almost up to the limit, he made a payment to the account of £98. But the firm wrongly credited the account with £981. Mr L seemed not to notice the error - and he spent up to his card limit again. But the firm then spotted the error and during June it debited Mr L's account with the over-credit of £883 (£981, less £98). However, this meant that the card statement at the end of June showed that Mr L owed the firm about £3,800 against his limit of £3,000.

The firm refused Mr L's request to increase his card account limit to £4,000. Mr L then went abroad, and no money was paid into the card account for several months. So the firm passed the debt to its debt recovery agents for collection. It also gave details of the debt to the credit reference agencies.

When the recovery agents eventually made contact with Mr L, he told them he was unemployed and could only afford to make token payments to the account. The firm offered to reduce his debt to £3,500 - on the basis that its error had, in part at least, been the cause of the increased debt. But Mr L would not accept that offer and he came to us.

He told us that he wanted the firm to:

  • give him his card account back;
  • remove his name from the credit reference agencies; and
  • give him £3,000.

We thought that that was far too much to ask for, but we did ask the firm if it might be prepared to give him back a bit more than it had previously offered. The firm came back with an increased offer of £950, and agreed to wipe out the adverse credit reference entry. We thought this was a very good offer, and we put it to Mr L. He rejected it, still holding out for his original claim.

An ombudsman then wrote to Mr L saying that he did not think we could better the firm's offer, so Mr L's choice was either to accept the offer or to take alternative action against the firm. Mr L accepted the offer.


Back in 1982, Mr R asked the firm for a mortgage. The firm commissioned a standard valuation report from a local valuer. This report confirmed, among other things, that the property was suitable security for a mortgage. So the deal went ahead and everything was fine until the summer of 1999, when Mr R decided to sell the house.

He agreed a price of £250,000 and the potential buyer had a survey done. The survey revealed that the property was built of a particular type of pre-cast concrete panel (covered with pebbledash rendering). Because of problems with that type of pre-cast concrete panel, the property was worth much less than £250,000. In the end, Mr R had to accept just £170,000 for it.

Mr R complained to the firm and asked it to make up the £80,000 difference. His reasoning was that the firm should have been put on notice that the property might have been built of these pre-cast concrete panels. This was because the 1982 valuer had said in his report that he could not tell what lay behind the pebbledash rendering.

Mr R supported his argument by saying that the firm had, at the time, been a new entrant into the mortgage market. He suggested that an established lender would have known about these concrete panels, and would have protected him from buying the property. In essence, he claimed that the firm's maladministration in not checking things thoroughly enough in 1982 had led directly to his £80,000 loss.

The firm strongly disagreed with Mr R's allegation. It said there was no reason for it to have been put on notice by the valuer's report, and it disputed whether any other firm would have thought, or done, anything different at the time. Added to that, Mr R had not even got his own survey. He relied on the simple valuation report which was done primarily for the bank as the lender, not for him as the borrower. The valuation report clearly said that the inspection of the property was limited and - on the form itself - it recommended potential purchasers to consider getting their own, independent, survey.

We agreed with the firm. There was no evidence of any maladministration by the firm in 1982. It had relied on a report from an independent valuer and, in the caseworker's view, had done all that could reasonably have been expected of it. The reduction in value, and the resultant reduction in the selling price, could not have been the firm's fault. So the caseworker told Mr R that, in his view, his complaint had no reasonable prospect of success. Mr R asked for a review of the caseworker's view. This resulted in the ombudsman reaching the same conclusion as the caseworker.


Mr T's business premises were broken into and quite a lot was stolen. After he made a claim under his insurance policy, he was sent a cheque for £9,000, which he paid into his account with the firm. He said that he paid in the cheque during early January 2001, but the credit only appeared on his bank account on 1 February. Mr T said that, because of this delay, the firm bounced a number of cheques that it should otherwise have paid.

When the firm looked into what had happened, it discovered that the paying-in slip Mr T had used had been date-stamped "1 January 2001". Clearly, that was wrong because 1 January was not a working day. The firm concluded that the cashier had simply made an error in not altering the stamp properly before starting work on 1 February. Mr T accepted that an error had occurred, but said that the error was in not making the date stamp read "10 January", the day on which he claimed to have paid in the cheque.

Stalemate was reached between the firm and Mr T - so he came to us. Our caseworker looked at the paying-in slip, which had been taken from a book of pre-printed slips, all numbered in sequence. He then asked the firm for copies of the two previous paying-in slips. They bore date stamps of "29 January" and "31 January" respectively. The caseworker concluded that the cheque had indeed been paid in on 1 February, rather than 10 January as Mr T had alleged. He wrote to Mr T outlining his conclusions, and we have not heard from Mr T since.

case studies - cases settled by mediation


In 1998, Mr H invested just over £5,000 in a stock market bond with the firm. But two years later, someone pretending to be Mr H withdrew the money from the bond and transferred it all to another account with a different firm.

Mr H did not discover what had happened for several months - and he only did so because he received a letter from the firm which didn't make sense to him, concerning the withdrawn investment. The firm accepted that it had acted on a fraudulent instruction. It reinstated the bond in such a way that Mr H did not suffer any loss. It also offered Mr H £250 for the inconvenience he had been caused.

Although Mr H was pleased to get his investment back, he was still out of pocket despite the £250, because he had taken time off work to try to sort things out. When we looked into the problem we thought that something nearer £500 would be more appropriate. We told the firm this and Mr H accepted the £500 it offered him.


Mr D and Ms E were directors of a company, G Limited. On 24 January 2001, they authorised the usual monthly payroll. The money was to be available for each employee (including themselves) to draw from their personal accounts on 29 January.

At about the same time, the board of G Limited, which was in financial difficulties, consulted a firm of insolvency practitioners. At its meeting on 29 January, the board agreed to place the company into voluntary liquidation. The following day - 30 January - the board informed the firm.

Also on 30 January, Mr D and Ms E noticed that the firm had withdrawn their salaries from their private bank accounts. After failing to get an explanation from the firm as to why it had done this, they asked their solicitors for help. The firm then gave a number of different, and contradictory, reasons for the removal of the money. These reasons were mainly tied up with the liquidation, and with who the firm believed to be authorised to act on behalf of G Limited.

By the middle of June, stalemate had been reached. The firm said that it would hold the amount in dispute in a separate account "to the order of the liquidators" - in other words, only payable to the liquidators - but that was all it was prepared to do.

The liquidator would not agree to pay the money back to Mr D and Ms E. But we felt that the real problem was with the firm. At a first reading, it seemed to us that when it got wind of the liquidation it had been - at best - hasty and over-zealous in removing the money from Mr D and Ms E's personal accounts.

We put those initial thoughts to the firm by phone and, shortly afterwards, it offered to:

  • re-credit the money to Mr D and Ms E's accounts;
  • pay them each a further £300; and
  • give them £800 towards their legal costs.

Mr D and Ms E accepted that offer.


Mr A took out a life policy in 1988. The sum assured was £19,000. He set up a direct debit to pay the monthly premiums from his account with the firm. All went well until 1996, when the firm stopped making the payments. It's not clear why this happened; it certainly wasn't a case of Mr A having no money in his account - there was always plenty available.

However, it was not until three years later - in 1999 - that Mr A noticed that payments were no longer being made. He phoned the life company, which told him he could re-instate the policy by making up the missed payments and by completing a new declaration of health. There was no problem in Mr A making the money up, but there was a problem with the health declaration. By then, Mr A had a terminal illness.

So the life company wouldn't re-instate the policy. It also said that it wasn't to blame for Mr A's failure to keep the payments up to date. It said it had written to Mr A several times in 1996 and 1997 but hadn't had an answer - some of the letters had been returned by the Post Office marked "gone away".

Mr A complained about the life company to the Personal Investment Authority Ombudsman Bureau - now part of the Financial Ombudsman Service - but it couldn't find any reason to criticise what the company had done. It didn't award Mr A any compensation. Mr A then decided to complain to the firm for - apparently - stopping paying the policy premiums without good reason.

After looking into what had gone wrong, and without really explaining why, the firm made an offer to Mr A - which he could take either as an immediate cash sum or as an indemnity for the remainder of the policy term. The indemnity option meant that the firm would guarantee to pay just over £8,000 to Mr A's personal representatives, at any time before the policy's expiry date. This sum was what it worked out as being the average net, discounted difference between the sum assured and the policy's surrender value - which Mr A had, by then, received from the life company.

Mr A was tempted to accept the indemnity offer, but he wasn't happy with the firm's calculation - he thought it should have been more than £8,000. So he came to us for help.

However, very soon after doing so, Mr A died. Shortly after that, his personal representatives got in touch with us. They decided to take over, and continue with, the complaint. We contacted the firm on their behalf and, after we had explained Mr A's misgivings about the figure of £8,000, it made a substantially higher offer - just over £15,000 - which Mr A's personal representatives accepted.


Mr G likes the occasional flutter on the horses. Back in June last year he identified a "sure winner" - so, before placing his bet, he phoned the firm to find out how much money he had in his account.

Armed with the answer, Mr G then set off for the betting shop and tried to place the bet, using his Switch card. But the transaction was refused - even though the firm had only just told him there was money in his account to cover the amount he wanted to bet.

Mr G's betting plans failed - but the horse didn't; it romped home. If Mr G had placed his bet, he'd have won almost £900.

Upset, Mr G complained to the firm. But it said that the Switch transaction had been properly declined; there hadn't been enough money in his account. It kept on saying this even though it had a tape of Mr G's earlier call which proved what Mr G was saying about what he'd been told he had in his account.

After Mr G complained to us, and we asked the firm some questions, it discovered that Mr G's call had been taken by someone in a different department from the usual customer call centre. This person would not have known about any transactions "in the pipeline". This is why Mr G was told he had more money available to him than the amount that could actually be authorised by the Switch system.

The firm decided to offer Mr G his lost winnings - plus another £100 - which he was happy to accept.


Miss P applied to the firm for a mortgage, through her financial adviser. She had understood that the particular mortgage package she was applying for gave her a £500 cashback. However, when she got the mortgage offer from the firm, there was no mention of the cashback. So Miss P phoned her financial adviser, who phoned the firm. The firm told the adviser that a mistake must have been made and that it would send out a new, correct, mortgage offer letter. But when that arrived, there was still no mention of the cashback.

Miss P phoned her financial adviser again, who phoned the firm again. It said that there must have been another mistake. But when the third mortgage offer letter arrived, the cashback was still not mentioned. By that time, Miss P needed to complete the deal or she risked losing her new home. She didn't have enough time left to get another mortgage from another lender, so she went ahead with the deal without the cashback, and then complained to the firm herself.

The firm told her that the particular mortgage she had asked for had never included a cashback. However, it said it was keen to resolve things and so it offered her a different mortgage deal that did have a cashback. But that deal meant that she would be tied into a fixed rate for longer than she wanted.

Miss P referred her complaint to us. We told her that, because she had not been a party to the conversations between the financial adviser and the firm, it was difficult to know exactly what had been said between them, and therefore to be able to decide if the second and third offer letters really were incorrect. But because there was at least a chance that the firm had given the financial adviser the wrong information over the phone, we asked it if it would be prepared to "split the difference" with Miss P and offer her £250. It agreed - and she accepted the £250.


Mr J bought his son a second-hand car costing £5,000. He paid for the car in three parts:

  • by part-exchanging his car for £3,000;
  • with a cheque for £1,500; and
  • by charging £500 to his credit card issued by the firm.

Things started to go wrong with the car more or less straight away. It spent most of the next six weeks back at the garage. The garage paid for all the repairs, which cost more than £1,200, but Mr J thought they should also compensate his son for the distress and inconvenience he had been caused, and for the six weeks worth of insurance and road fund licence he felt had been wasted.

The garage didn't agree - so Mr J turned to the firm, putting in a claim under Section 75 of the Consumer Credit Act 1974 (the "Act"). However, the firm also refused to pay up. It said that there wasn't a valid debtor-creditor-supplier relationship under the Act, and that it therefore had no obligation to meet Mr J's claim. The reason for there not being such a relationship was, it said, because the garage's invoice for the car had been made out to Mr J's son, not to Mr J himself, and "any statutory right under the Act could not be extended by way of gift".

Mr J then came to us. It was not up to our caseworker in the assessment team to decide whether Section 75 did, or did not, apply (that would have needed an investigation and a finding on the merits of the complaint). There were, in her view, arguments both ways. But, just as importantly, if Section 75 did apply, it seemed clear that only some of Mr J's claim could ever be successful, because we could only ever make an award for Mr J's losses, not for those of his son.

By then, the firm had offered Mr J £250 as a gesture of goodwill. The caseworker explained her initial thinking to Mr J and said he could either accept the firm's offer, or reject it and wait while we conducted an investigation. After taking into account what the caseworker had said about the limitations on the amount we might ultimately award, Mr J accepted the £250.

Walter Merricks, chief ombudsman

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.