Raw deal? Don't get mad, get an ombudsman

If your financial adviser loses all your money on a frolic of his own, your insurance company refuses to pay your valid claim, or your bank has overcharged you, you need not shed tears of impotent rage. Ombudsmen and other arbitrators may be able to get you redress for free (in many cases) and without going to court.

Alternatively, if a firm goes bust and owes you money, there may be help from one of the so-called funds of last resort.

First, you must try to resolve your differences through a firm's own complaints procedure. Keep a contemporaneous record of everything that happens. Ask the name of anyone you speak to. Ombudsmen will not take you on until after the senior management has made a final decision on your case.

There may be limits, generally pounds 50,000 or pounds 100,000, on the size of cases ombudsmen will take on. The finality of an ombudsman's decision varies. If you go to The Pensions Ombudsman, for instance, his decision is binding, and appeal, which is to the High Court, is allowed only on a point of law.

If, on the other hand, your case is with the Personal Investment Authority (PIA) Ombudsman, you can reject his decision and still go to court.

Try to take your case to the right ombudsman, if only to save yourself time. Most sorts of investments, including PEPs, life insurance and unit trusts (but not bank or building society accounts) come under the remit of the PIA Ombudsman. The Investment Ombudsman looks only at problems referred by customers of firms that are members of Imro (Investment Management Regulatory Organisation).

Complaints about the selling of a personal pension also need to be directed to the PIA Ombudsman. Administration of a personal pension may come under the PIA Ombudsman, too.

Complaints destined for the Pensions Ombudsman - typically those concerning employer-based pensions - first need to be referred to Opas (Occupational Pensions Advisory Service) on 0171-233 8080 or through your local Citizens Advice Bureau.

Some schemes are voluntary, so you have to check that the organisation you are dealing with is a member. Insurers that are not members of the Insurance Ombudsman Bureau may belong instead to the Arbitration Service of the Chartered Institute of Arbitrators (0171-837 4483).

Phone numbers for ombudsmen include: PIA Ombudsman 0171-240 3838; Pensions Ombudsman 0171-834 9144; Insurance Ombudsman 0171-928 7600; Investment Ombudsman 0171-796 3065; Banking Ombudsman 0171-404 9944; Building Societies Ombudsman 0171-931 0044.

Complaints against a firm that is a member of the Securities and Futures Authority (SFA) - typically stockbrokers - are investigated by the SFA's Complaints Bureau at Cottons Centre, Cottons Lane, London SE1 2QB (0171- 378 9000). For claims less than pounds 50,000, you can pay pounds 50 and use the SFA's Consumer Arbitration Scheme.

If an investment firm goes out of business owing you money, you can turn to the Investors Compensation Scheme (ICS). It covers investments in stocks and shares, unit trusts, personal pension plans and some long- term insurance policies. The ICS pays the first pounds 30,000 of claims that it accepts in full and 90 per cent of the next pounds 20,000.

A copy of the ICS's How we handle your claim for compensation is available from Gavrelle House, 2-14 Bunhill Row, London EC1Y 8RA (0171-628 8820).

The ICS also publishes Tips for Investors, a leaflet on how to steer clear of trouble.

If a building society cannot repay deposits that are due, the Investor Protection Scheme comes into play. Maximum compensation is 90 per cent of the first pounds 20,000 owed. You can obtain A Guide for Investors from The Building Societies Investor Protection Board, 15 Great Marlborough Street London W1V 2LL (0171-494 6615).

For banks, the equivalent protection comes from The UK Deposit Protection Scheme. Compensation is again capped at 90 per cent of the first pounds 20,000. You can contact the scheme at The Deposit Protection Board, 19 Old Jewry, London EC2R 8HA (0171-601 3050).

More generous terms are on offer for customers of insurers under the Policyholders Protection Act. If your insurance company goes into liquidation owing you money, 90 per cent of the liability is met with no upper limit. The Policyholders Protection Board is at 51 Gresham Street, London EC2V 7HQ.

If an accountancy firm has been arranging investments for you and has gone out of business owing you money, you may be able to claim 100 per cent of what is due, up to pounds 50,000, from the Investment Business Compensation Scheme (0171-920 8727).

The certified accountants' scheme (0171-396 5917), by comparison, pays the first pounds 30,000 in full plus 90 per cent of the next pounds 20,000.

Solicitors acting as Independent Financial Advisers would be covered by the Law Society's Compensation Fund (maximum compensation pounds 1m). Contact the Solicitors Complaints Bureau on 01926 820082.

Compensation from an insurance broker has to be awarded by the courts. However, the Insurance Brokers Registration Council (IBRC) can pay damages due from member firms that are in liquidation. Contact the IBRC, 15 St Helen's Place, London EC3A 6DS.

If you end up heading for the courts, you may want to employ a solicitor. Ask a Citizens Advice Bureau for advice.

Alternatively, you can claim up to pounds 3,000 yourself through the relatively informal small claims procedure of the county court.Leaflets advising on the procedure for this are available in county courts.