But of these four, it is the last that we’re most interested in here – The Ombudsman. There are various types of ombudsman, each of which is an independent consumer watchdog for the sector it covers.

Financial Ombudsman Services
The Financial Ombudman Services was created by The Financial Services and Markets Act 2000 and it considers independently – free of charge - complaints about financial products. It doesn’t give advice, make the rules and nor will it fine companies for breaking the rules. Instead it only arbitrates.

It is paid for purely through a levy on the businesses it charges and case fees payable by businesses being investigated. No fees are charged to consumers.

Each business will, in any one financial year, be allowed two case investigations free of charge. Subsequent cases involve a charge of £400 per case irrespective of outcome.

The fee is very hard to find on the FOS website – deliberately so, because the FOS doesn’t want to give consumers the opportunity to blackmail businesses with demands such as ‘give me £250 and I’ll go away’. Armed with that information, it’s quite possible for a group of people to extort monies.

The FOS covers, amongst others, around 26,000 businesses that are regulated by the Financial Services Authority for their retail financial services activities and around 80,000 businesses that the Office of Fair Trading have issued Consumer Credit Licences.

Changes since April 2007
The biggest change to the Financial Ombudsman Services system came on April 6, 2007. The FOS can now look at most complaints that involve a consumer credit transaction.

That means the FOS now covers businesses whose main activity is lending and hiring; other activities such as debt collection and credit brokerage and those where credit is a secondary activity such as retailers.

These businesses are now required to have in place an in-house complaints handling procedure, the idea being to resolve complaints before they escalate. Failure to operate a complaints handling procedure could affect the business’s eligibility to hold a Consumer Credit Licence.

The advice from the FOS is to have a written complaints procedure and to document every stage of the complaint. The procedure needs to be publicised to consumers ideally in writing at the point of sale; supplying a copy if requested and automatically supplying a copy when a complaint is received.

But the obligation doesn’t stop there. All employees need to be aware of the procedure and its method of operation; management needs to have a policy in place to allow consistent and fair treatment of all complaints; management needs to be able to spot and deal with recurring problems and probably most importantly if a business upholds the complaint appropriate redress needs to be offered and honoured if accepted.

The redress can be financial, it could be an offer to correct a consumers credit record or it could be something as simple as an apology.

How do consumers complain?
The FOS will only consider a case once the business concerned has had a chance to deal with the complaint being made. However, if a resolution is not forthcoming, the consumer is asked to put the matter in writing.

They aren’t advised at this point to take legal advice, so at least costs for the business are capped at this point in time. The idea is to encourage informal and cost-free debate that leads to resolution.

However, that doesn’t mean that the consumer cannot and will not appoint a legal advisor, so be prepared.

If the matter cannot be resolved amicably, the consumer may make a formal complaint. But before any complaint can be progressed through the ombudsman process, it has to pass various tests such whether the business is covered by the FOS; whether the complaint is covered – for example, matters involving commercial judgement are not; when the event occurred as time limits apply; and the relationship between consumer and the business.

Third party (individuals other than the consumer) complaints will generally not be investigated and only certain business to business matters will be, these being a small business with a turnover of less than £1m, a charity with an income of less than £1m, or a trust with a net asset value of less than £1m.

Time limits are important. If a complaint arises businesses need to send the consumer a written acknowledgement as soon as possible; they need to keep the consumer informed of the progress of the complaint and issue a final response within eight weeks of the initial complaint.

The letter needs to tell the consumer if they do not agree with the decision they can go to the FOS within six months of the date of the final response. Consumers can also lodge a complaint within six years of the event that causes the upset. That said, if there are no objections from the business, the time limits can be waived.

From the business’s perspective, the eight week time limit can be extended only if there are ‘exceptional circumstances’. Here the business needs to explain the situation to the consumer, mention the availability of the FOS and include a copy of the FOS' consumer leaflet. These leaflets cost £5 for a pack of 25 and they can be ordered from http://www.financial-ombudsman.org.uk/publications/guidance/telling-your-customers.htm - look for the link halfway down the page called ‘our order form’.

The FOS rules state that business cannot handout photocopies of this leaflet or any other material downloaded from the website – only originals.

The process is non-binding; that is the consumer making a complaint doesn’t have to accept the ruling of the FOS, they can still decide to pursue a claim through the courts.

However, once the decision has been accepted, it does become binding on all sides. Unlike the court system, precedents are not set – just because one case may win or lose, it doesn’t determine the outcome of subsequent or similar cases.

Most complaints will be resolved within a year, a third, however, will be resolved in under three months.

It’s also worth noting that the FOS will consider complaints from consumers who are based overseas. The issue is the location of the selling business not the country of residence or nationality of the consumer making the complaint.

What can the FOS do?
The FOS says it employs a common sense approach. After checking the eligibility of the complaint the FOS looks to see what is fair and reasonable in the circumstances. The appropriate laws and codes of practice applicable at the time of the complaint will be taken in account.

The FOS mantra is informal mediation. Should the case prove complex a formal adjudication will be issued. A very small number of cases lead to a review and final decision by the ombudsman.

According to the FOS: 'In about one third of the disputes we settle, we conclude that the consumer was right. In another third of the disputes, we conclude that the business was right. And in the final third, we conclude that the business was right – but explained things so poorly, that it was hardly surprising the consumer didn't understand.'

In terms of awards, the FOS can order a payment to the consumer for the loss and any pain and suffering, reputational damage as well as distress and inconvenience up to a maximum of £100,000.

On rare occasions costs can be awarded. The decision only becomes binding once the consumer accepts the ruling. And if needs be, they can go to the courts to enforce the ruling.

Services for business
The FOS says that it doesn’t want to just arbitrate. It also wants to help businesses prevent problems occurring in the first place. And so it offers, free of charge, a technical helpdesk; a newsletter that is published 10 times a year; conferences, training and seminars on complaints handling matters. And of course, there is also the FOS website.

There is so much there that time spent looking online would be time well spent.

If you want to promote your business as an example of best practice, the FOS will allow you to use their logo on appropriate marketing material and correspondence. There are terms that cover non-abuse and copyright, but other than that there is no cost. Call 0207 964 0854 for more information.

At the end of the day, some would say a complaint is an opportunity. If a consumer complains it’s generally because they want to keep buying from you and that right now they’re upset.

Fix the problem and you may have a customer for life.

More Information at www.financial-ombudsman.org.uk