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ombudsman news

issue 16

May 2002

the assessment team

The March 2002 issue of ombudsman news included a feature about the assessment team in our banking and loans division. The investment division also has an assessment team, operating in a very similar way.

The caseworkers in these assessment teams explore a variety of ways to try and resolve cases at an early stage - only passing on for adjudication the cases that cannot be settled properly except by a full investigation.

how does it do this-

The caseworkers in these assessment teams don't duplicate the important investigation work done, where necessary, at a later stage. Instead, they check carefully through the case papers, focusing on whether there is scope to settle the complaint at this early stage, on the grounds of "early termination" or "mediation".

early termination

The Financial Ombudsman Service has discretion to stop dealing with a complaint in certain circumstances. This is called "early termination" and our 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 said about what happened. There would be no real point embarking on a detailed investigation of these cases. This is because, even if we upheld the complaint, we could not award any more than is currently on offer. Where we find this is the position, a caseworker will contact the customer to recommend that they accept the firm's offer.

Some customers are reluctant to agree to this. They can, of course, always appeal to an ombudsman and very 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 the complaint. Where an ombudsman does, occasionally, come to a different view, it is usually only because additional information has come to light at this later stage.


We can often resolve cases by means of mediation. Typically, using their knowledge and experience of how similar cases have been settled in the past, caseworkers act as "go-betweens" and try to bring the two parties together.

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 caseworker cannot bring about agreement by means of mediation, 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. Inevitably there will be some cases that can only be resolved fairly by an investigation and a formal decision. But we are finding that the percentage of investment cases that we can resolve at this early stage, without the need for a full investigation, is growing.

how can firms help-

In two main ways:

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

Firms should react promptly when our customer contact division writes to tell them it is passing a complaint to the assessment team. That letter details the basic information that we always need for a particular type of complaint and asks the firm to provide the information.

Firms should also respond quickly if the assessment team caseworker subsequently asks them for additional details. This won't happen in every case. But 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. Most cases handled by our assessment team are concluded within three months.

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

case studies - early termination


Mr and Mrs M's complaint concerned their mortgage endowment policy. They said they had been assured it would provide a sufficient amount when it matured to repay their mortgage. They also claimed that their adviser had "churned" a previous endowment policy (persuaded them to terminate the policy and take out a new one, purely so that he could get commission on the new sale).

The caseworker sent Mr and Mrs M her initial view of the complaint, explaining why, based on the evidence provided, she did not think it would succeed. The couple had sent us the document they were given when they took out the second mortgage endowment policy. This stated clearly "the amount of cash value is not guaranteed and depends on the investment performance of the units allocated to your plan". It also said "the rate of growth cannot be guaranteed and the value of units can fall as well as rise". There was no evidence of any kind that the adviser had been guilty of "churning".

Mr and Mrs M rejected the caseworker's view and asked for their case to be passed on for an ombudsman's decision. The ombudsman rejected the complaint for the same reasons given by the caseworker.


Mr and Mrs J took out two with-profits mortgage endowment policies in 1979 and a further two policies with the same firm in 1980. They believed that some time later they had made the policies fully "paid up" (in other words, that they had not cancelled the policies but were not paying any further premiums). Since the policies had now reached their maturity date, Mr and Mrs J wished to claim the proceeds.

However, the firm's records indicated that the couple had not made the policies "paid up" but had surrendered them in 1989 and 1990 respectively. As the firm only keeps its full records for six years, no further details were available.

Mr and Mrs J were unable to provide any evidence to counter the firm's view of what had happened to the policies. They accepted our opinion that the very limited information available meant that there was no basis on which their claim could succeed.


Ms H complained about a delay in a Personal Equity Plan (PEP) transfer that had resulted in her losing out because of a fall in the value of her investment during the period of the transfer.

She wanted to transfer her PEP from firm A to firm B. Firm B sent the transfer instructions to firm A by letter, dated 15 August 2001. However, firm A claimed not to have received the letter until 27 September 2001.

Ms H considered firm A to be responsible for the delay and wanted it to pay compensation for the fall in the PEP's value during the transfer period.

We explained that unless she was able to establish that the delay was the fault of firm A rather than - for example - the postal service, her complaint was unlikely to succeed. Ms H was not able to do this and she accepted that she could not pursue the complaint further.

case studies - mediation


Mr G's complaint concerned a mortgage endowment policy he had taken out in July 1990. He said the adviser had not made him fully aware of the risks associated with this type of investment. He also claimed that if he had known about the risks, he would have chosen a repayment mortgage instead.

The firm originally upheld Mr G's complaint, although it said it had done so more as a gesture of goodwill than because it accepted any liability. Mr G was not satisfied with the offer it made him and he referred the complaint to us.

We found no evidence that, before selling the policy to Mr G, the firm had established his attitude to risk. It said Mr G's previous ownership of an endowment mortgage was evidence that he was aware of the risks attached to this type of plan.

We asked Mr G what his understanding was of how his previous endowment operated and what the risks were. He did not appear to have much understanding at all of the policy. He said his main reason for choosing it was that his parents had taken out endowment mortgage policies in the past.

There was no indication that he was aware of any risks. Mr G had bought this first policy before financial services regulation came into force, so there had been no requirement for the adviser to draw key facts about the investment to his attention, or to make any record of his requirements and attitude to risk. However, this was not the position by the time he bought the second policy.

After we discussed the situation with the firm, it agreed to offer Mr G compensation, calculated in accordance with Regulatory Update 89 (RU89).


Mr C complained on behalf of his mother, who was in dispute with her bank. The bank had managed Mrs C's investment portfolio until she closed it in 1994. Then some seven years later the bank wrote to Mrs C. It said that during a routine review it had discovered it still owed her £1,185. This was a refund of part of its annual management fee for the portfolio. It apologised for its oversight and offered her an additional sum of £68 to cover interest on the amount it owed her.

The bank's letter did not demonstrate how it had calculated the interest. Mr C raised this with the bank and it told him that it had used the same rate of interest that it applied to cash held within its portfolio service. However, it told him that its letter had stated the wrong amount and that the amount it would pay Mrs C, over and above the £1,185, was £346.

Mr C did not think the bank had used an adequate rate of interest and he brought the complaint to us. In his view, the bank should have calculated the interest at 5% and added £300 for the distress and inconvenience it had caused.

When we first contacted the bank, it agreed to make an ex-gratia payment of £300, but not to re-calculate the interest at the rate Mr C suggested. Mr C declined this offer as he still felt the rate of interest used was inappropriate. Following further mediation, the bank agreed to meet Mr C's claim in full.

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.