Although not bound by law, precedent or process the Financial Ombudsman Service (FOS) is extremely procedure led. Their procedures are set out in the Dispute Resolution Rules (DISPs) and any failure to comply with those rules, at any stage in the life of a complaint, may seriously impede the defence of a claim.
Before referral to the FOS the most important DISP is 1.6.2. This sets out the deadline of eight weeks for providing, and the precise content required of, a Final Response (FR). Any failure to adhere strictly to that DISP could prevent a matter becoming time barred, or result in an adjudication being issued without representation from the defendant firm. Likewise the appropriateness of the content of a FR could mean the difference between an early resolution and a matter being pursued.
Recent changes to Annex 1 to DISP 1 has introduced further key provisions for a FR. These deal with any time bar arguments which are, or may become, available and whether a defendant firm will waive the right to rely on them. If you waive a right to rely on a time limit, you cannot withdraw that waiver later. However, if you do not agree to waive any such arguments, you retain the right to change your mind. For this reason there seems little benefit to waiving the right at such an early stage.
After referral to the FOS it will need to be decided whether to:
- Dispute the FOS’s jurisdiction
- Challenge the eligibility of the claimant to complain to the FOS
- Raise a limitation defence (DISP 2)
- Seek dismissal without consideration of the merits (DISP 3)
Where relevant, these matters should be determined before the complaint is investigated to prevent the FOS’s decision being influenced by the merits of the underlying complaint.
If none of the above apply, or have been declined, full details of the complaint should be provided so that detailed submissions can be made at the earliest opportunity. An argument is more likely to be successful at this initial stage than if first raised later after an initial adjudication has been made. Although they are not binding, take the opportunity to review previous final decisions which are published on the FOS' website - these will give guidance on the view which is likely to be taken and the areas of weakness or strength which will need to be addressed in your FR.
Be aware that the FOS can widen the scope of any complaint received so avoid referring to irrelevant information or providing too much information which could invite the FOS to consider other issues. A recent decision related to a complaint made about an alleged failure to disclose fees and proportionality. Whilst the original ground for complaint was rejected, the FOS upheld the complaint on the basis that the underlying investment was unsuitable.
It is also possible to indicate a willingness to accept a decision but argue against an award, particularly if you can show that it would be unfair or is inappropriate eg, because of the suggested benchmark to be used for nominal growth, the time period for loss or the breakdown of a calculation.
The decision process is adjudication with referral to an ombudsman if the adjudication is not accepted by both parties. There is nothing preventing the negotiation of a settlement between parties whilst the process is ongoing, although it is likely that a claimant will seek input from the FOS. Marking correspondence without prejudice will not prevent the FOS considering it but if any offer falls within the parameters of what the FOS considers fair and reasonable it is likely to support the acceptance of the offer.
An ombudsman's final decision is binding if accepted by the claimant and there is very little scope for getting this overturned. The value and benefit of spending time in dealing with the matter properly in the early stages is therefore great.