DISP 3.1 Application and Purpose

Application

DISP 3.1.1 G 01/04/2002

This chapter applies to the Ombudsman and to firms.

DISP 3.1.2 R 01/04/2002

It is also relevant to those who might wish to refer a complaint to the Financial Ombudsman Service.

DISP 3.1.3 R 01/04/2002

VJ participants are subject to the rules in this chapter by contract under the standard terms (see DISP 4).

DISP 3.1.4 G 31/10/2004

Except as otherwise specified, references in this chapter to a "complaint" include:

(1)
a relevant new complaint and a relevant transitional complaint; and2
(2)
part of a complaint or a relevant new complaint or a relevant transitional complaint.2 1

DISP 3.1.5 R 31/12/2006

References in this chapter to "firms" are to be construed, where relevant, as including:

(1)
in accordance with the Ombudsman Transitional Order, unauthorised persons subject to the Compulsory Jurisdiction in relation to relevant complaints; and
(2)
as a result of section 226 of the Act, unauthorised persons who were formerly firms in respect of complaints about acts or omissions which occurred at the time when they were firms, provided that the Compulsory Jurisdiction rules were in force in relation to the activity in question; and3
3
(3)
members of the Society of Lloyd's (see DISP 2.5.3 G).3

DISP 3.1.6 G 31/10/2004

The Ombudsman Transitional Order and the Mortgage and General Insurance Complaints Transitional Order provide, with some exceptions (see DISP 2.2.2 G and DISP 2.2.2A G (scope of Compulsory Jurisdiction and Relevant transitional complaints), DISP 2.2.3 G (time limits), DISP 2.4.14 G and DISP 2.4.15 G (eligible complainant) and DISP 3.8.2 G and DISP 3.8.2A GDISP 3.8 (determinations), for relevant new complaints and relevant transitional complaints to be determined in accordance with the requirements of the Financial Ombudsman Service.2

Purpose

DISP 3.1.7 G 01/04/2002

The purpose of this chapter is to set out the way in which the Financial Ombudsman Service and, in particular, the Ombudsman, will operate to ensure that complaints may be resolved quickly and with minimum formality. It sets out the procedures for the investigation and consideration of complaints, including the circumstances in which a complaint may be terminated without consideration of its merits; the evidence which may be required or admitted; the provisions for fixing and extending time limits for different aspects of the proceedings; the factors which the Ombudsman will take into account in determining what is fair and reasonable; the types of loss or damage for which the Ombudsman can award compensation; the limits on awards and the costs that can be awarded.

DISP 3.2 The investigation and consideration of complaints by the Ombudsman

DISP 3.2.1 R 01/04/2002

On receipt of a complaint (and subsequently if necessary) the Ombudsman must have regard to the following matters:

(1)
whether or not the complaint meets the criteria in DISP 2.2 (Which complaints can be dealt with under the Financial Ombudsman Service?);
(2)
whether or not the complaint is within the time limits in DISP 2.3 (Time limits for referral of complaints to the Financial Ombudsman Service);
(3)
whether or not the complainant is an eligible complainant; and
(4)
whether or not the complaint is one which should be dismissed without consideration of its merits under DISP 3.3(Dismissal of complaints without consideration of the merits).

DISP 3.2.2 R 01/04/2002

In the case of relevant new complaints, the Ombudsman will take account of the relevant criteria under the Ombudsman Transitional Order, referred to in DISP 2.2.2 G, and will extend the time limits in DISP 2.3, as required under article 4(2) of the Ombudsman Transitional Order and described in DISP 2.3.2 G.

DISP 3.2.3 R 01/04/2002

Where the firm has not had the eight weeks provided for under DISP 1.4.5 R to consider the complaint, the Ombudsman will refer the complaintto the firm, unless the firm has already issued a final response.

DISP 3.2.4 R 01/04/2002

Where a firm fails to send a complainant a final response by the end of eight weeks, the Ombudsman may consider the complaint.

DISP 3.2.5 R 01/04/2002

Where the Ombudsman considers that the complaint or the complainant may be ineligible under the jurisdiction rules (see DISP 2 (Jurisdiction of the Financial Ombudsman Service)) he must give the complainant an opportunity to make representations before he reaches his decision and he must give reasons to the complainant for that decision and inform the firm of his decision.

DISP 3.2.6 R 01/04/2002

DISP 3.2.5 R applies without prejudice to a firm's right to raise the issue of eligibility subsequently.

DISP 3.2.7 R 01/04/2002

Where the firm disputes the eligibility of the complaint or the complainant, the Ombudsman must give the parties an opportunity to make representations before he reaches his decision and he must give reasons to the parties for that decision.

DISP 3.2.8 R 01/04/2002

Where the Ombudsman considers that the complaint may be one which should be dismissed without consideration of its merits, under DISP 3.3 (Dismissal of complaints without consideration of the merits), he must give the complainant an opportunity to make representations before he makes his decision. If he then decides that the complaint should be dismissed, he must give reasons to the complainant for that decision and inform the firm of that decision.

DISP 3.2.9 R 01/04/2002

Where the Ombudsman considers that both the complaint and the complainant are eligible and that there is a reasonable prospect of resolving the complaint by mediation, he may attempt to negotiate a settlement between the parties.

DISP 3.2.10 G 01/04/2002

The Ombudsman will attempt to resolve complaints at the earliest possible stage and by whatever means appear to him to be most appropriate, including mediation or investigation.

DISP 3.2.11 R 01/04/2002

If the Ombudsman decides that an investigation is necessary, he will:

(1)
during the investigation, give both parties an opportunity of making representations;
(2)
send to the parties a provisional assessment, setting out his reasons and a time limit within which either party must respond; and
(3)
if either party indicates disagreement with the provisional assessment within the time limit prescribed in DISP 3.2.11 R (2), proceed to determination (see DISP 3.8 (Determination by the Ombudsman)).

DISP 3.2.12 R 01/04/2002

The parties will be informed of their right to make representations before the Ombudsman makes a determination. If he considers that the complaint can be fairly determined without convening a hearing, he will determine the complaint. If not, he will invite the parties to attend a hearing. No hearing will be held after the Ombudsman has determined the complaint.

DISP 3.2.13 R 01/04/2002

A party who wishes to request a hearing must do so in writing, setting out the issues he wishes to raise and (if appropriate) any reasons why he considers the hearing should be in private, so that the Ombudsman may consider whether the issues are material, whether a hearing should take place and, if so, whether it should be held in public or private.

DISP 3.2.14 G 01/04/2002

In deciding if there should be a hearing and, if so, whether it should be in public or private, the Ombudsman will have regard to the provisions of the European Convention on Human Rights.

DISP 3.3 Dismissal of complaints without consideration of the merits

DISP 3.3.1 R 01/10/2005

The Ombudsman may dismiss a complaint without considering its merits if he:

(1)
is satisfied that the complainant has not suffered, or is unlikely to suffer, financial loss, material distress or material inconvenience; or
(2)
considers the complaint to be frivolous or vexatious; or
(3)
considers that the complaint clearly does not have any reasonable prospect of success; or
(4)
is satisfied that the firm has already made an offer of compensation which is fair and reasonable in relation to the circumstances alleged by the complainant and which is still open for acceptance; or
(5)
is satisfied that the complaint relates to a transaction which the firm in question has reviewed in accordance with the regulatory standards for the review of such transactions prevailing at the time of the review, or in accordance with the terms of a scheme order under section 404 of the Act (Schemes for reviewing past business), including, if appropriate, making an offer of redress to the complainant, unless he is of the opinion that the standards or terms of the scheme order did not address the particular circumstances of the case; or
(5A)
7is satisfied that the firm in question has reviewed the complaint in accordance with any formal regulatory requirement, standard or guidance published by the FSA or other regulator in respect of that type of complaint, including, if appropriate, making an offer of redress to the complainant, unless he is of the opinion that the terms of the requirement, standard or guidance did not address the particular circumstances of the case; or
(6)
is satisfied that the matter has previously been considered or excluded under the Financial Ombudsman Service, or a former scheme (unless material new evidence likely to affect the outcome has subsequently become available); or
(7)
is satisfied that the matter has been dealt with, or is being dealt with, by a comparable independent complaints scheme or dispute resolution process; or
(8)
is satisfied that the subject matter of the complaint has been the subject of court proceedings where there has been a decision on the merits; or
(9)
is satisfied that the subject matter of the complaint is the subject of current court proceedings unless proceedings are stayed or sisted (by agreement of all parties or order of the court) in order that the matter may be considered under the Financial Ombudsman Service; or
(10)
considers that it would be more suitable for the matter to be dealt with by a court, arbitration or another complaints scheme; or
(11)
is satisfied that it is a complaint about the legitimate exercise of a firm's commercial judgment; or
(12)
is satisfied that it is a complaint about employment matters from an employee or employees of a firm; or
(13)
is satisfied that it is a complaint about investment performance; or
(14)
is satisfied that it is a complaint about a firm's decision when exercising a discretion under a will or private trust; or
(15)
is satisfied that it is a complaint about a firm's failure to consult beneficiaries before exercising a discretion under a will or private trust, where there is no legal obligation to consult; or
(16)
is satisfied that a complaint which involves or might involve more than one eligible complainant has been referred without the consent of the other complainant or complainants and the Ombudsman considers that it would be inappropriate to deal with the complaint without that consent; or
(17)
is satisfied that there are other compelling reasons why it is inappropriate for the complaint to be dealt with under the Financial Ombudsman Service.

DISP 3.3.1A R 01/10/2005

7The Ombudsman may dismiss a complaint without considering its merits if:

(1)
before he has made a determination, he has received in writing from the firm:
1. (a)
  a detailed statement of how and why, in the firm's opinion, the complaint raises an important or novel point of law with significant consequences; and
2. (b)
  an undertaking in favour of the complainant that, if the complainant or the firm commences court proceedings against the other in respect of the complaint in any court in the United Kingdom, within six months of the complaint being dismissed, the firm will: pay the complainant's reasonable costs and disbursements (to be assessed if not agreed on an indemnity basis) in connection with the proceedings at first instance and any subsequent appeal proceedings brought by the firm; and make interim payments on account of such costs if and to the extent that it appears reasonable to do so; and
(2)
the Ombudsman considers that the complaint:
1. (a)
  raises an important or novel point of law, which has important consequences; and
2. (b)
  would more suitably be dealt with by a court as a test case.

DISP 3.3.1B G 01/10/2005

7Factors the Ombudsman may take into account in considering whether to dismiss under DISP 3.3.1A R include (but are not limited to):

(1)
whether the point of law is central to the outcome of the dispute;
(2)
how important or novel the point of law is in the context of the dispute;
(3)
the significance of the consequences of the dispute for the business of the firm or for its customers;
(4)
the significance of the consequences of the dispute for the business of firms in that sector or for their customers;
(5)
the amount at stake in the dispute;
(6)
the remedies that a court could impose;
(7)
any representations made by the firm or the complainant; and
(8)
the stage already reached in consideration of the dispute.

DISP 3.3.2 R 01/04/2002

Under article 5(2)(c) of the Ombudsman Transitional Order, the Ombudsman, in deciding whether a relevant complaint is to be dismissed without consideration of its merits, is to take into account whether an equivalent complaint would have been so dismissed under the former scheme in question, as it had effect immediately before commencement.

DISP 3.3.2A G 31/10/2004

1Under article 4(2) of the Mortgage and General Insurance Complaints Transitional Order, the Ombudsman, in deciding whether a relevant transitional complaint is to be dismissed without consideration of its merits, must take into account whether an equivalent complaint would have been so dismissed under the former scheme in question, as it had effect immediately before the relevant commencement date.

DISP 3.3.3 G 01/04/2002

For the purposes of DISP 3.3.1 R (4), offers of compensation include ex gratia payments.

DISP 3.3.4 R 01/04/2002

In DISP 3.3.1 R (5) the transaction could, for example, be a pension transaction which has been reviewed by the firm in accordance with the relevant regulatory standards. The Ombudsman may decide not to proceed with a complaint about the result of that review unless he considers that the standards or guidance published by the regulator did not address the particular circumstances of the case.

DISP 3.3.5 R 01/04/2002

When deciding if it would be suitable for a complaint to be dealt with outside the Financial Ombudsman Service (DISP 3.3.1 R (10)), the Ombudsman may consider whether, in view of a conflict of evidence, a fair resolution of the complaint could be achieved only through examination of the evidence by the courts.

DISP 3.3.6 G 01/04/2002

The Ombudsman may decide to proceed with a complaint which would otherwise be dismissed under DISP 3.3.1 R (13), DISP 3.3.1 R (14) or DISP 3.3.1 R (15) if he considers that the complaint involves an allegation of negligence or maladministration.

DISP 3.4 Referral of a complaint to another complaints scheme for determination

DISP 3.4.1 R 01/04/2002

The Ombudsman may refer a complaint to another complaints scheme where he considers that it would be more suitable for the matter to be determined by that scheme and the complainant consents to the referral.

DISP 3.5 Evidence

DISP 3.5.1 R 01/04/2002

The Ombudsman may, in relation to the evidence which may be required or admitted when he considers and determines a complaint, give directions as to:

(1)
the issues on which evidence is required;
(2)
the extent to which the evidence required to decide those issues should be oral or written; and
(3)
the way in which the evidence should be presented to the Ombudsman.

DISP 3.5.2 G 01/04/2002

The Ombudsman may:

(1)
exclude evidence that would otherwise be admissible in a court of law or include evidence that would not be admissible in such a court;
(2)
where he considers it necessary or appropriate, accept information in confidence, so that only an edited version or (where this is not practicable) a summary or description is disclosed to the other party;
(3)
reach a decision on the basis of what has been supplied and take account of the failure by a complainant or a firm to provide information that an Ombudsman has requested; and
(4)
dismiss a complaint if a complainant fails to supply required information.

DISP 3.5.3 G 01/04/2002

The provisions in DISP 3.5.2 R (1) follow the provisions of the Civil Justice Rules.

DISP 3.5.4 R 01/04/2002

For the purposes of DISP 3.5.2 R (2), evidence which the Ombudsman may accept in confidence includes confidential evidence about third parties and security information.

DISP 3.5.5 R 01/04/2002

The Ombudsman may request a party to a complaint to provide evidence necessary for the determination of the complaint under section 231 of the Act. A failure to comply with the request can be dealt with by the court under section 232.

DISP 3.5.6 R 01/10/2005

3The Ombudsman may, where he considers it appropriate, take into account evidence from third parties; including, but not limited to, the FSA, other regulators, experts in industry matters and experts in consumer matters.

DISP 3.6 Time limits

DISP 3.6.1 R 01/04/2002

The Ombudsman may fix time limits and extend fixed time limits for any aspect of the consideration of a complaint by the Financial Ombudsman Service.

DISP 3.6.2 G 01/04/2002

If a firm fails to comply with a time limit, the Ombudsman may proceed to the next stage of consideration of the complaint and may, if appropriate, make provision for any material distress or material inconvenience caused by that failure in any award which he decides to make.

DISP 3.6.3 G 01/04/2002

If a complainant fails to comply with a time limit, the Ombudsman may either proceed to the next stage or dismiss the complaint.

DISP 3.7 Delegation of the Ombudsman's powers

DISP 3.7.1 R 01/04/2002

(1)
Only an Ombudsman may determine a complaint or decide the circumstances in which information may be disclosed under DISP 3.10.1 R (3).
(2)
The Ombudsman may designate members of the staff of FOS Ltd to exercise any of the other powers of the Ombudsman relating to the reference, investigation or consideration of a complaint.
(3)
Where any person is so designated, DISP 2 - DISP 4 apply as if any reference to "the Ombudsman" included a reference to that person.

DISP 3.7.2 R 01/04/2002

The Chief Ombudsman will designate those members of staff of FOS Ltd who are to have these powers.

DISP 3.8 Determination by the Ombudsman

Opinion as to fairness and reasonableness

DISP 3.8.1 R 01/04/2002

(1)
The Ombudsman will determine a complaint by reference to what is, in his opinion, fair and reasonable in all the circumstances of the case.
(2)
In considering what is fair and reasonable in all the circumstances of the case, the Ombudsman will take into account the relevant law, regulations, regulators' rules and guidance and standards, relevant codes of practice and, where appropriate, what he considers to have been good industry practice at the relevant time.

DISP 3.8.2 G 01/04/2002

In determining, in relation to a relevant new complaint, what is fair and reasonable in all the circumstances of the case and what amount (if any) constitutes fair compensation, for the purposes of section 229(2)(a) of the Act (money awards), the Ombudsman is required, under article 7(2) of the Ombudsman Transitional Order, to take into account:

(1)
what determination the former Ombudsman might have been expected to reach, and
(2)
what amount (if any) might have been expected to be awarded by way of compensation;

in relation to an equivalent complaint dealt with under the former scheme in question immediately before commencement.

DISP 3.8.2A G 31/10/2004

1In determining, in relation to a relevant transitional complaint, what is fair and reasonable in all circumstances of the case and what amount (if any) constitutes fair compensation for the purposes of section 229(2)(a) of the Act, the Ombudsman is required, under article 5(2) of the Mortgage and General Insurance Complaints Transitional Order, to take into account what determination might have been expected to be made under the former scheme in question and what amount (if any) might have been expected to have been awarded or recommended by way of compensation under that scheme, in relation to an equivalent complaint dealt with under the former scheme immediately before the relevant commencement date.

The Ombudsman's determination

DISP 3.8.3 R 01/04/2002

The Ombudsman's determination will include the following stages:

(1)
When a complaint has been determined, the Ombudsman will give both the complainant and the firm a signed written statement of the determination, stating the reasons for it.
(2)
The statement will invite the complainant to notify the Ombudsman in writing before the date specified in the statement whether he accepts or rejects the determination.
(3)
If the complainant notifies the Ombudsman that he accepts the determination within the time limit set, it is final and binding on both the complainant and the firm.
(4)
If the complainant either rejects the determination or does not notify the Ombudsman by the specified date that he accepts the determination, the complainant will be treated as having rejected the determination, and the firm will not be bound by it.
(5)
The Ombudsman must notify the firm of the complainant's response (or lack of response).

DISP 3.9 Awards by the Ombudsman

Money awards

DISP 3.9.1 G 01/04/2002

As provided for under section 229 of the Act (Awards), if a complaint is determined in favour of the complainant, the determination may include:

(1)
a money award against the firm of such amount as the Ombudsman considers fair compensation for financial loss or for loss or damage of a kind specified in DISP 3.9.2 G and subject to the maximum limit in DISP 3.9.5 R; or
(2)
a direction that the firm take such steps in relation to the complainant as the Ombudsman considers just and appropriate (whether or not a court could order those steps to be taken); or
(3)
both of these.

DISP 3.9.2 G 01/04/2002

Where the Ombudsman decides to make a money award, in addition to (or instead of) awarding compensation for financial loss, he may award compensation for the following kinds of loss or damage, whether or not a court would award compensation:

(1)
pain and suffering; or
(2)
damage to reputation; or
(3)
distress or inconvenience.

DISP 3.9.3 G 01/04/2002

For the purposes of awards by the Ombudsman, financial loss includes consequential or prospective loss.

DISP 3.9.4 G 01/04/2002

In determining, in relation to a relevant new complaint, what amount (if any) constitutes fair compensation for the purposes of a money award, the Ombudsman is required under article 7(2) of the Ombudsman Transitional Order to take into account what amount (if any) might have been expected to be awarded by way of compensation, in relation to an equivalent complaint dealt with under the former scheme in question immediately before commencement.

Limits on money awards

DISP 3.9.5 R 01/04/2002

The maximum money award which the Ombudsman may make is £100,000.

DISP 3.9.6 G 01/04/2002

If the Ombudsman considers that an amount more than the maximum is required as fair compensation, then he may in addition recommend to the firm that it pays the balance.

DISP 3.9.7 G 01/04/2002

The Ombudsman may specify in his award that reasonable interest must be paid on the award (at the rate and from the date he states).

DISP 3.9.8 G 01/04/2002

For the purposes of calculating the monetary limit referred to in DISP 3.9.5 R the amount of interest awarded does not form part of the award itself.

DISP 3.9.9 G 01/04/2002

The limit on the maximum money award has no bearing on any direction which an Ombudsman may make as part of a determination.

Costs

DISP 3.9.10 R 01/04/2002

When the Ombudsman finds in a complainant's favour, he may also award an amount which covers some or all of the costs which were reasonably incurred by the complainant in respect of the complaint.

DISP 3.9.11 G 01/04/2002

It is not anticipated that awards of costs will be common, since in most cases complainants should not need to have professional advisers to bring complaints to the Financial Ombudsman Service.

DISP 3.9.12 R 01/04/2002

The amount payable under the award of costs may, if the Ombudsman orders, bear interest at a reasonable rate specified in the order and from a date specified in the order.

DISP 3.9.13 G 01/04/2002

For the purposes of calculating the monetary limit specified in DISP 3.9.5 R, an award of costs does not form part of the award itself.

Complying with awards and settlements

DISP 3.9.14 R 01/06/2003

A firm must comply promptly with:

(1)
any money award or direction made by the Ombudsman or any award of money or other award made by an ombudsman appointed under the PIA Ombudsman scheme (including any interest payable by order of the PIA Ombudsman or the Ombudsman); and1
(2)
any settlement which it agrees at an earlier stage of the procedures.

DISP 3.9.15 R 01/04/2002

The Ombudsman must maintain a register of each money award and direction made.

DISP 3.9.16 G 01/04/2002

A money award registered in accordance with DISP 3.9.15 R can be recovered or enforced through the courts under paragraph 16 of Schedule 17 to the Act.

DISP 3.9.17 G 01/04/2002

A complainant may enforce a direction by injunction or order in accordance with section 229(9) of the Act (Awards).

DISP 3.10 Dealing with information

DISP 3.10.1 R 01/04/2002

(1)
In dealing with any information received in relation to the consideration or investigation of a complaint, the Financial Ombudsman Service must have regard to the parties' rights of privacy.
(2)
Paragraph (1) does not prevent the Ombudsman disclosing information (either in full, or where he considers it necessary or appropriate under DISP 3.5.2 R (2), in the form of an edited version or (where this is not practicable) a summary or description):
1. (a)
  to the extent that he is required or authorised to do so by law; or
2. (b)
  to the parties to the complaint; or
3. (c)
  in his determination; or
4. (d)
  at a hearing in connection with the complaint.
(3)
So long as he has regard to the parties' rights of privacy, the Ombudsman may disclose information to the FSA or any other body exercising regulatory or statutory functions for the purpose of assisting that body or the Financial Ombudsman Service to discharge its functions.

DISP 3.10.2 G 31/10/2004

Under article 11 of the Ombudsman Transitional Order and article 11 of the Mortgage and General Insurance Complaints Transitional Order, any information held by any person responsible for the operation of a former scheme in connection with the operation of a former scheme may be disclosed by that person (after commencement or, as the case may be, the relevant commencement date) to FOS Ltd or to an Ombudsman without contravening any restriction on disclosure of that information (imposed by statute or otherwise) to which that person was subject. But FOS Ltd or the Ombudsman is subject to any restrictions on disclosure (and exceptions) which would have applied to the former holder of that information.1

DISP 3.10.3 G 31/10/2004

Article 11 of the Ombudsman Transitional Order and article 11 of the Mortgage and General Insurance Complaints Transitional Order do not, however, prevent the application of section 31(4A) of the Data Protection Act 1998. This provides for an exemption in respect of subject information provisions to the extent to which the application of those provisions to data would be likely to prejudice the proper discharge of the functions conferred under Part XVI of the Act (The Ombudsman Scheme).1

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