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5 Myths about Ombudsman

5 Myths about Ombudsman

Alternative Dispute Resolution (ADR) providers which include ombudsman, provide services for business and consumers. When customers can’t get their complaint resolved and the trader is a member of a scheme, they can take their complaint to an ADR provider. Before doing so, consumers need to fully pursue the internal complaints process of the company they’re in dispute with prior going to an ombudsman. If the company refuses to comply with a customer request to resolve the problem, they should ask for a ‘letter of deadlock’ to show they’ve done all they can to resolve the complaint.

If the company fails to respond to this final letter within a reasonable period of time (around, 14 days), the complaint can be escalated to the ombudsman. Ombudsman schemes tend to cover a particular industry or sector, including private companies and public or governmental organisations. They are free for consumers to use and are an alternative to going to court to sort out a problem. An ombudsman acts as independent 'referee' who looks at both sides of the argument, makes enquiries, asks questions and comes up with a remedy or solution that they believe is fair. Benefits of companies using Ombudsman schemes include increasing consumer confidence, developing staff knowledge and service standards and saving businesses and their customers legal fees and time should things go wrong.

Below are a few popular myths around ombudsman and ADR providers debunked. Whilst an Ombudsman is a key part of the ADR landscape, there are certain features of an Ombudsman scheme that differentiates it from other ADR models. An Ombudsman’s remit is wider than the dispute before it and whilst all ADR schemes offer dispute resolution, an Ombudsman has been held out as a “gold-plated service”.

Five commonly held beliefs about ombudsman

1. Ombudsman are consumer champions

Incorrect. A consumer champion will fight for the consumer. An ombudsman is an unbiased service. Each case is looked at individually and decisions are made on the evidence provided.

2. Ombudsman are paid by the traders so will always see in their favour

Nope. The traders pay, yes. The alternative would be for consumers to pay at least a proportion! The traders pay a yearly fee plus a case fee. If the case goes to arbitration then in some cases, such as with the Furniture & Home Improvement Ombudsman, an independent inspection is required, the trader pays for this too. Therefore it is actually in the traders’ interest to try and resolve the matter and for it not to go to the Ombudsman. An Ombudsman service gets paid the same win or lose so there is no incentive to find in favour of either party.

3. All ombudsman are funded by Government

Wrong. All providers in the non-regulated sector, such as furniture and airlines are funded by the industry. Providers in the regulated sector such as the Financial Ombudsman, energy and telecoms are also funded by the industry so that services are free to consumers. Others, such as the Local Government Ombudsman are funded with public funds.

4. If the trader doesn’t want to pay up, it won’t

In the regulated areas of finance, energy and telecoms if a trader doesn’t abide by an ombudsman’s decision then it will be reported to the regulator. Financial Conduct Authority, Ofgem and Ofcom. They will investigate and if found to be in breach of the rules can be shut down. In the non-regulated areas if the trader doesn’t abide by a decision they will be expelled from the scheme. The rate for noncompliance is very low.

5. There are lots of people who have gone to court when not happy with an Ombudsman decision

If the Ombudsman doesn’t see in the consumers’ favour it doesn’t necessarily mean it is wrong. It could be that enough evidence wasn’t provided and the same could happen in court. The court option always remains open to consumers, but it rarely reaches this stage. An ombudsman will usually be open to looking again at any case if more evidence is presented to them.

Kevin Grix, CEO and Chief Ombudsman, the Furniture and Home Improvement Ombudsman said, “We’ve been providing services to our members and their customers including independent alternative dispute resolution, training and advice for over a quarter of a century. There is still, however some misinformation out there related to ombudsman and hopefully we’re able to dispel some of these myths today. Our government approved, not-for-profit scheme helps to provide consumers with additional peace of mind and supports businesses and their customers in finding solutions when disputes occur, without the need for costly and lengthy litigation. “

John Norris, Service & Installation Development Manager, Magnet said: “We used FHIO long before the ADR regulations were implemented, and we have found that the service they provide has always been balanced, considered and fair.

We work closely with them to ensure that the services we provide comply with the letter and the spirit of consumer legislation.”


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