No complaints, please: pond life can't argue

We, the sad sack customers, have always been at the bottom of the financial services food chain. We have all the power and influence of pond life as we try to muddle through the incredibly important task of trying to plan our futures.

Swimming above us are the mighty marketing and sales departments of all the financial firms - and they use formidably sophisticated tactics to lure us to buy their products.

But when you make a complaint against a firm you will almost certainly have noticed that there is a massive gap (it's more like a ravine) between the helpfulness of the marketing and sales staff, the glossiness of the brochures and so on - and the treatment you can expect to receive as a dissatisfied customer. You are right back at the bottom of the pond.

As things stand, there's no requirement for any company to run an externally audited complaints procedure. They don't even have to log complaints (if you don't actually register that customers are unhappy, you cannot be accused of having a poor record on settling complaints). And there's no limit on what can be regarded as a reasonable timescale for settling a complaint. Many people, frustrated with the total lack of response from their bank, mortgage lender, insurer or fund manager, try to take it a stage further and contact an impartial ombudsman scheme.

Top marks for initiative for those who manage to find the right place to complain - there are eight schemes, covering different areas of financial services. Some of them are compulsory - meaning firms have to be members, and abide by the ombudsman's judgement. And some of them are voluntary, which makes the whole process fairly toothless. At the extremely dodgy end of the market, mortgage brokers who aren't regulated to give financial advice (and don't have to have any qualifications, either) don't have to be in any ombudsman scheme at all.

Even if you find the right ombudsman, and your firm is covered, the scheme cannot attempt to sort out your grievance until it has passed through the firm's own complaints procedure. So you are back to square one.

Things are about to change. Customers may still be pond life, but at least we will have some protectors with sharp teeth. The Financial Services Authority and the independent FSA Ombudsman launched a joint consultation paper on consumer complaints last week. There's not going to be too much room for consultation on this as the FSA is determined to force firms to conform to a new set of rules about handling internal complaints. And (even better) if the internal complaints procedure doesn't settle the problem to your satisfaction within eight weeks, then the new single ombudsman for all financial services will take on the case.

This is a gross oversimplification of what is a complex process. And there are still plenty of loopholes - most pressingly that mortgage brokers will still slip through the net. But in the long term many of the worst of these firms will be forced out of business anyway.

It should be a fairer world for small fry.

ni.berwick@independent.co.uk