Unsurprisingly, consumers do not always know to whom they should address their complaints - last year 10 per cent of complaints received by the Banking Ombudsman should have been directed elsewhere.
However this confusion will soon end. Next year, an all-embracing service will be born, spawned by the Financial Services Authority (FSA), the regulatory regime launched last October which will eventually regulate all providers of financial services in the UK and replace the current regulators.
A single Financial Services Ombudsman scheme is to replace the eight schemes covering the financial sector. They are: the Banking, Building Society, Insurance, Investment and Personal Investment Authority Ombudsman schemes, the Personal Insurance Arbitration Service, the SFA Complaints Bureau and Arbitration Services and the FSA Independent Investigator.
The establishment of the single ombudsman scheme is set out in the draft Financial Services and Markets Bill. Operating as a company, it will be established by the FSA but will work independently.
The FSA will be integrating the existing schemes as opposed to starting from scratch - the existing schemes have built up considerable expertise and it would be foolhardy to dispense with their knowledge.
The FSA has been working with the ombudsman steering group, which has Laurie Slade as an independent chairman. The group's members are the five existing ombudsmen and the FSA head of consumer complaints policy.
The arrangements for unifying the existing ombudsman schemes have involved:
l examining the scope of bringing all the schemes together under one roof;
l considering the practicalities of integration before the legislation is in place;
l ensuring that the scheme will retain the benefits of flexibility and informality;
l working on its detailed design, particularly its organisational structure and case-handling procedures.
When the limited company that will run the scheme is formed, the Ombudsman Scheme's board (OSB) will be appointed - its key role being to decide the structure of the new scheme.
Priorities for the OSB will be to appoint the Chief Ombudsman and the Panel of Ombudsmen - tasks that should be completed by March. High on its agenda will also be the merger of the existing schemes, the completion of which will create a single point of entry for complaints.
The new scheme is expected to have between 250 and 400 staff and a budget of between pounds 15m and pounds 20m.
However, while it may all sound ideal in theory, the creation of a single Ombudsman Scheme has its critics.
One leading campaigner for consumer rights, who was in the running for membership of the OSB but declared himself unavailable, suggested that an immobile monster was being created. And the most recent annual reports of the existing schemes have also expressed concerns. For example, the council of the Building Society Ombudsman Scheme stated: "An ombudsman scheme should bear no resemblance to the process of going to law, which is a very expensive way to resolve disputes and one that consumers find daunting.
"An ombudsman offers a mechanism that is independent, fair, informal, flexible and speedy. We have concerns that the single ombudsman may not produce these benefits."
As the new scheme is to be compulsory for regulated firms and is to issue binding decisions, it will be a requirement under the European Convention on Human Rights to make provisions for oral hearings. Apart from the attendant cost of these changes, some observers feel that the informality and flexibility of the current schemes will be lost.
It will also be interesting to see whether the public and providers of financial services will regard an adjudication scheme run under the auspices of the regulator as truly independent.
Should it not be viewed as completely separate from the FSA, there is the danger that the scheme will be perceived by consumers as another piece of regulatory bureaucracy. Hopefully the OSB will ensure that the scheme is an improvement on the existing arrangements and is absolutely independent. Only time will tell.Reuse content