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ombudsman news

issue 35

February/March 2004

ask ombudsman news - your questions answered

case dismissed - so why must I pay-

You said in a recent edition that you don't charge a case fee if you decide to dismiss a complaint "without consideration of its merits". So why have you sent my firm an invoice for a case that you dismissed this way-

In ask ombudsman news (issue 33), we confirmed that we don't charge a case fee where we consider it readily apparent that the complaint should be dismissed without consideration of its merits (for example, because the complainant clearly hadn't suffered financial loss or material inconvenience). Staff on our front-line - in our customer contact division - will often be able to identify such cases early in the process, before we start more detailed work on them. Where, at this early stage, we can decide that we should dismiss a complaint, we don't charge a case fee.

But sometimes it won't be readily apparent that the complaint can be dismissed at this stage. We may still need to investigate to be sure that we've got to the bottom of the complaint, have satisfied ourselves about the facts - and are acting properly in dismissing it. As we said in ombudsman news issue 33, first impressions about a complaint can be deceptive. Where we cannot readily dismiss a complaint, we charge a case fee - even if, after a close study of the facts, we later decide to dismiss the complaint.

right rate for mis-selling calculation-

I've heard that you've said firms should use Halifax's standard variable rate when doing the calculations in mortgage endowment mis-selling cases. Is this true-

No. A firm should only use the Halifax standard variable rate in these circumstances if it has been impossible for it to establish what the actual rate of interest was for that particular consumer.

Normally, the firm will know who the mortgage lender was, and will be able to get exact details of the mortgage in question - in order to establish the specific interest rate(s) that applied. It is only if the firm cannot trace the original mortgage lender, or if there are difficulties in getting details of the actual mortgage, that it should use the Halifax standard variable rate (which would have been broadly similar to other rates at the time).

If a firm uses the Halifax rate in these circumstances, then we expect it to tell the consumer - and to explain that the calculation is, by necessity, approximate. The consumer still has the right to request an exact calculation, if they can provide details of the actual rate(s) that applied in their case. But the consumer can't ask for an exact calculation and then opt for the approximate Halifax-rate based calculation, if, from the consumer's point of view, the Halifax rate gives a more favourable outcome.

Walter Merricks, chief ombudsman

ombudsman news issue 35 [PDF format]

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.