Do the banks hold all the aces?


…or how a bank and the Financial Ombudsman Service (FOS) treated a customer unfairly until we helped them see the light.

You’ve probably read that you can ask the FOS to take a look if a company rejects your PPI complaint. They should be fair and impartial in their handling.  Is this always the case?

Before we answer that, it’s worth repeating what we’ve often said… for many cases, you don’t need outside help and that the banks and the FOS will be fair and deal with your complaint properly.  We’re not anti-banks or the FOS, but that doesn’t always mean things always go as the banks and FOS wish they should or that there’s not room to improve…

When it goes wrong…

The media and trusted consumer sites are well-meaning, but often don’t know the reality.  They haven’t made lots of complaints themselves. Here’s an example to explain what we mean (there are more and we’ll perhaps come back to those in future posts).

Mrs S came to us.  We found PPI on a bank credit card and did a complaint for her. The bank rejected it and we went to the Financial Ombudsman Service (FOS).  The adjudicator (the first level at the ombudsman) said that the bank should uphold the complaint (i.e. they were in favour of Mrs S).

Sounds good – except that the bank disagreed.  A different adjudicator then changed the original decision.  They said that – based on evidence provided by the bank – they were NOT upholding teh complaint.  They said that they were enclosing the bank’s evidence.  That evidence was sample application forms from around the same time. Not Mrs S’s actual form which they did not have.  The adjudicator said that these showed that Mrs S would have had to have signed up for PPI.

There was a problem – they did not send us the sample forms.  When we asked, the FOS said they’d made a mistake and that the bank would not allow us to see the evidence because the sample forms contained “personal data” from other customers.

“Hmm” we thought.  We continued to argue that we needed to see the evidence, but this took six months and a complaint to the ombudsman to sort out.  The FOS said it was OK for the bank to withhold this information.  Our argument was that the bank could either withhold it, or not use it, but not both.

It is against the principle of natural justice for one side to have evidence and not allow the other to see it.  At least one manager at the FOS believed that they could still fairly settle cases even in this lopsided, loaded dice situation.

Fortunately the bank gave in and said that the adjudicator could share the forms with the personal data blanked out. (The whole personal data thing was a smokescreen in our view. Any personal data should have been blanked out before the bank sent the forms to the FOS anyway).  It seems as though someone at the bank just did not want us to see those forms…

Commonsense and justice prevails.

When we reviewed the sample forms, we found out why!   They mentioned PPI, but there were two issues:

  1. The cost of the PPI was not shown – it should have been.
  2. More importantly, there was no way for the customer to say no to PPI – they would have had to not sign the form at all – i.e. not get the credit card. There was no separate yes/no or check box next to the PPI section or separate signature box etc.

So the sample forms actually showed exactly the OPPOSITE of what the bank and the 2nd adjudicator said they did.  In fact the first ombudsman had clearly seen this and made the right decision.  The 2nd adjudicator had not – we may never know why.

We challenged this and the adjudicator has now once again changed their decision and ruled in favour of Mrs S. It’s worth mentioning that we already knew in this case that the money at stake was very little (less than £10) so there was no chunky fee coming our way.  But we understand that for many clients this is not all about money – it’s about what’s fair; so we had to put the effort in even if that takes many months as it did in this case.

Is this a conspiracy?

Unlikely*, but when large organisations deal with thousands of cases, mistakes happen.  The process needs safety nets, but these are currently inadequate.

The PPI deadline made this problem worse.  The FOS is dealing with a huge increase in complaints.  They also have to handle the backlog of unfair commission (Plevin) cases.  We are seeing multiple cases where anyone would think that the bank and the FOS is acting unfairly and unreasonably.

Adjudicators at the first level in the FOS seem inexperienced or are too busy to always properly address complaints. They are not bad people.  They’re good people trying to do a very difficult and extremely busy job.  Unfortunately the only option to question their decisions is to ask for an ombudsman review (the 2nd/final stage at the FOS) or go to court.

You won’t know how long you need to wait for an ombudsman review –  it takes months at the moment.  And you can’t complain to anyone else about a FOS decision.  Any organisation which does not answer to anyone for its actions is going to have problems sometimes.  The way the FOS is set up means this is unavoidable in our opinion.

For example, the bank defended this claim incorrectly in this case and the adjudicator just went along with them.  What’s to say that this has not happened in thousands of other similar cases where the same application forms were used to sell PPI?

The FCA rules say that the bank should consider whether they had a systemic mis-selling issue due to these forms and review earlier cases.  The FOS should also review any complaints which came to them involving paper application forms during the same period.  We’re not holding our breath.  Instead we see a FOS which supports banks withholding evidence in complaints – that does not seem to be in-line with the FOS’s aim to be fair and impartial.

What can I do to have a better chance of success?

Make sure you don’t take decisions at face value.  Get hold of as much information as you can (do a full Subject Access Request if needed).  Make sure you understand the rules on mis-selling which you can find online in the FCA Handbook.   If you’re in the right, be organised and persistent.

*We’re trying to stay factual and avoid exaggeration. We do find it “curious” that in 2018, a major bank still doesn’t know that it’s paper application forms were systemically flawed and therefore automatically agree to such complaints.