Personal finance: I must complain

If you are unhappy with your bank or have a problem with an investment or pension, who do you complain to? The first stop is the relevant bank/financial adviser/pension provider, but if you don't get any joy there you can take it further - to one of the financial services ombudsmen.

At the moment, financial services has several ombudsmen dealing with different areas. Not surprisingly, this has led to a fair amount of confusion, according to Philip Telford of the Consumers' Association. "We find people don't know who they should complain to, especially if they've already been through the company's own complaints procedure," he explains.

"The various schemes also have different rules, which doesn't help the consumer."

That should be addressed sometime next year when a single Financial Services Ombudsman will replace the various ombudsmen. But Telford hopes that the new scheme will also take a more pro-active role. "We'd like to see the new Ombudsman share information with the regulators, so that they can react more quickly if bad practices are flagged up, or if certain companies are generating a lot of complaints."

Chris Hobley, a former teacher, hopes the new system will give consumers more help with complaints. Two years ago, he complained to the Personal Investment Authority (PIA) Ombudsman about a life insurance company that had sold him a 25-year endowment policy in 1990.

At the time, he'd wanted to retire early, build up some savings and pay off his mortgage. Despite having a repayment mortgage, he was sold an endowment. "The policy I was sold wouldn't mature until several years after my mortgage would be paid off and wouldn't do anything to boost my pension," he says.

The insurance company eventually offered him a refund of his premiums plus interest but Mr Hobley felt he should get more. "If I'd been given the right advice I would have tried to top up my pension through the teachers' scheme and had more money to live on now that I've retired."

It was many months with frequent letters and phone calls before he received a decision from the PIA Ombudsman bureau - he was to get an extra pounds 250 for "distress and inconvenience" on top of the original compensation offer.

Mr Hobley feels very disillusioned with the process, but says he'd have found it much harder if he hadn't received professional help with his claim. "Because I'm not a financial expert, I don't know what I can complain about and what's outside the rules and regulations," he explains. "My original complaint to the company three years ago, which they rejected, had been about the poor performance of my policy. I now realise it performed so badly because they'd sold me a 25-year plan, not the 10-year one I was told I was getting."

Under the Financial Services Act, if a policy performs badly, you have no comeback to the provider (unless you can show mis-management of funds). Paul Cooper who runs Claims (Compensation from Life Assurance Mediation Services), and who helped Mr Hobley with his complaint, thinks that this and other rules may have caught out many unsuspecting investors.

Mr Cooper says: "The PIA Ombudsman Bureau says that it offers an inquisitorial service, but with the caseload it has, I'm not convinced there's time to do that very thoroughly. If the complaint is badly put together, the investor risks losing out."

Anthony Holland, the PIA Ombudsman says that all the case workers try and get to the bottom of the complaint: "When we get a case, even if the person complaining hasn't identified the issue - we will hopefully uncover it."

But he admits there are many more investors whose complaint doesn't ever reach his door: "I'm convinced there are many more people with a legitimate complaint who don't know their rights," he says. "Financial services has a ghastly collection of factors; it's complicated, it's sold to the unknowing and it's driven by commission. It's a pretty difficult recipe to get right."

Cooper argues that even when a complaint does get through, the odds are stacked against the consumer because the insurance companies always have more resources at their disposal.

He says: "I've taken more than 500 cases to the bureau in the last couple of years, and won redress for over 90 per cent of them, which is a far higher success rate than the average PIA complainants. One problem is that people who get a complaint upheld aren't usually awarded anything to pay professional fees."

Holland admits that some cases are complex enough to justify expert help, but says it shouldn't become the norm: "If I think professional help is justified, I will award costs, but there's a danger that the Ombudsman scheme will become an adversarial contest if costs are regularly awarded."

Stuart Cliffe, of the National Association of Bank Customers, which regularly deals with the bank and building society ombudsmen, feels that there's a big problem of perception: "We find that customers often think of the ombudsmen as being a knight in shining armour. In fact, he's more of a referee than a judge - passing the customer's comments to the institution and the institution's comments to the customer and trying and find a middle ground."

Cliffe believes that the new Financial Services Ombudsman should have greater powers and a more investigative role to give consumers a better chance of redress.

HOW TO HELP YOUR

COMPLAINT TO SUCCEED

1 Keep copies of letters between you and the bank/ insurance company.

2 If you're complaining by telephone, make notes of phone calls - who you spoke to, what was said etc.

3 You're unlikely to be able to get compensation to pay for professional help, but if your claim is complex or involves a large sum, it may be worth your while.

4 Expect the claim to take some time - six months is not unusual and it could take a lot longer.

USEFUL NUMBERS

Banking Ombudsman: 0345 660902; Building Societies' Ombudsman: 0171-931 0044; Insurance Ombudsman: 0845 600 6666; Investment Ombudsman: 0171-796 3065; PIA Ombudsman: 0171-712 8700; Claims: 0181-947 6046; National Association of Bank Customers: 01291 430009