Fraud victims and cheated consumers are waiting more than two years for justice due to an unprecedented backlog at the Financial Ombudsman Service (FOS).
The free dispute resolution service is a lifeline for consumers who have exhausted all other possibilities after being financially wronged, and is the last step before taking a company to court.
But a Money Mail investigation reveals thousands of complaints are taking years to resolve.
Backlog: The Financial Ombudsman Service is a lifeline for consumers who have exhausted all other possibilities after being financially wronged
The Ombudsman’s latest data reveals it has a huge caseload of 158,038 open complaints. More than one in six was first logged over a year ago, and some 11,648 date back more than two years.
Since launching in 2001, the FOS has dealt with around 3.9 million complaints.
It now has 2,756 members of staff, up from just 450 when it first opened.
But experts warn the service is struggling to cope with demand – with pressure only increasing as its remit continues to widen.
Customers can complain about most financial services, from debt collection and loans, to insurance and mortgages.
The service will also soon handle complaints about funeral plan providers and buy-now-pay later firms.
Yet its reputation has suffered in recent years. In 2018, a damning Channel 4 investigation revealed staff had a ‘severe lack of training’ and understanding of financial services.
It found some were ruling in favour of banks without looking at the files properly and warned thousands may need to be re-examined.
A month later Money Mail revealed that FOS relied on computer software to decide if banks should repay PPI mis-selling victims.
Financial problems exacerbated by the pandemic have led to a surge in complaints.
But over the next year, as claims about mis-sold payment protection insurance (PPI) decline, the Ombudsman will shrink as an organisation.
Its budget for this financial year is £261.3 million, which is expected to fall to £238.4million in 2021/22.
But while reducing the number of staff working on PPI, it has promised to recruit more investigators to help on other cases.
All businesses covered by the Ombudsman and regulated by the FCA pay an annual levy to contribute to the cost of the service.
Earlier this year the Treasury Committee expressed concern at the ‘effectiveness’ of the FOS, which had over 56,000 cases open for more than six months, and 23,000 open for more than two years at the end of November.
With fraud cases – where victims often lose life-changing sums – only one in four is resolved within three months
Lots of factors can influence how long a case can take to investigate, such as the level of complexity, legal issues and when the problem occurred.
For example, complaints about pension advice may go back years, which can mean there are more historical documents involved in the investigation.
Some of the oldest cases on file include due-diligence complaints about complex and high-value self-invested personal pensions (Sipps), many of which have been delayed following legal action.
Following an investigation by the Treasury Committee in November, chairman Mel Stride MP wrote to chief Ombudsman Caroline Wayman to ask how she plans to reduce case handling times and minimise complaint backlogs.
With fraud cases – where victims often lose life-changing sums – only one in four is resolved within three months.
The internet is also littered with complaints about the service. Of the 770 reviews on Trustpilot 90 per cent are either ‘poor’ or ‘bad’.
And experts have blasted the FOS for a lack of timely responses to vulnerable customers.
Karen Jackson, solicitor and managing director of law firm Didlaw, which specialises in disability discrimination, says in 2019 the Ombudsman would have handled complaints within four months.
Now it is advising a four-month wait for a case handler just to get in touch – and many customers are waiting longer.
She says: ‘We’ve always recommended the Ombudsman as a highly accessible service for consumers but in the past year or so the service level has really dropped. It’s a real shame because for consumers the FOS is often the last resort before legal action – if they can afford it.’
Gary Rycroft, a partner at solicitors Joseph A. Jones & Co, says: ‘We really are at crisis point with the Ombudsman grinding to a halt. It is a really anxious time for customers who want swift justice but are just being left in limbo.’
One victim was was tricked by a firm that used fake testimonials from TV presenter Ant McPartlin (pictured)
The Ombudsman’s offices are based in London and Coventry, but most employees have been working from home for a year.
But like for so many other organisations during the pandemic, customers are reporting difficulties reaching FOS by phone or email.
John Campbell, 63, lost £36,000 to fraudsters who posed as Goldman Sachs staff in November 2019, and his bank, Santander, refused to refund him.
After months waiting for the bank to investigate, he took his complaint to the Ombudsman in March last year – but is still waiting for a resolution.
Mr Campbell, a father of two, says his emails have gone unanswered and he struggles to get through to anyone on the phone.
He says: ‘When I was told there would be delays due to Covid-19, I understood and was sympathetic. But it’s been a year now and I have been left in limbo.’
Santander says it is reviewing his case.
Another scam victim, Julian Lambert, from Nottinghamshire, took his case to the Ombudsman last April after Nationwide, declined to refund his lost money.
The retired sales director was tricked into transferring £835 to a firm that used fake testimonials from TV presenter Ant McPartlin and claimed to sell digital currency Bitcoin.
Julian, 64, says the Ombudsman promised to look into his complaint. But 11 months on and it is yet to be resolved. He says: ‘I feel like I am getting nowhere with this.’ Nationwide says it will look at Julian’s complaint again.
Jeanette Gonzalez-Seoane, 74, has been waiting 16 months. The former finance manager, from Southampton, complained about mail order catalogue Studio Retail after it hiked the interest rate on credit payments due to her age.
She says: ‘According to the leaflet from the Financial Ombudsman, it promises to ‘always keep you updated so you know what to expect’. ‘This has not been the case at all. I understood there may be delays due to the pandemic, but my patience is running out.’
Studio Retail refused to comment on Jeanette’s case, but says it occasionally reviews interest rates based on changes to customer credit profile and market conditions.
The Ombudsman says so far this year it has received around 50 per cent more cases than expected.
A spokesman says: ‘We deal with thousands of complaints about financial providers from people who have seen their lives or businesses impacted by Covid-19.
This high volume of cases means it can take longer than we’d like to get some allocated cases.
‘We have recruited new staff which will ensure we continue to provide an effective service.’