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International Ombuds Day

Get to know the arbitrators!

The 8 October 2020 is International Ombuds Day. The second Thursday of every October its aim is to raise awareness of what an Ombudsman does.

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What is an ombudsman?

An Ombudsman is an Alternative Dispute Resolution (ADR) provider. You may use an Ombudsman to arbitrate in cases where a business and you are in dispute. An Ombudsman adjudicates and makes a decision which is binding on the trader (they lose membership if don’t abide by the rules but this rare) but not on you should you not agree and want to take the matter to court. The Ombudsman is impartial and cannot side with the business nor with the consumer

There are other different forms of ADR which include arbitration, mediation/conciliation and negotiation.

When should I use an Ombudsman?

You can try other avenues first. For example, you can contact the CEO using ceoemail.com to get the details. Write to the CEO, who may not respond personally, but it will escalate the matter and get their dedicated executive team involved. If you have purchased an item costing more than £100 on a credit card you can try to make a Section 75 claim from your credit card provider, which is jointly liable with the seller. Or you can go to the Small Claims Court. You will need to show that you have considered ADR prior to having your case heard.

Regulated areas

Service providers in the regulated sectors, such as those in energy (Ofgem), communications (Ofcom) and financial services (FCA) must sign up to an Alternative Dispute Resolution (ADR) scheme. In most cases this is an Ombudsman.

Non-regulated areas

In the non-regulated areas, such as providers of goods and services, it is not mandatory for businesses to be a member of an ADR scheme. However, many are and it can be part of the reason for purchasing from a certain company. For example, if you want to make a large home purchase knowing if they are a member of The Furniture & Home Improvement Ombudsman you have somewhere to go if something goes wrong. Same with buying a car from member of The Motor Ombudsman.

Costs of using an Ombudsman

It does not cost you anything to take your complaint to the ombudsman. It is worth remembering that it DOES cost the business both in a yearly fee and per case that is processed. That means it is in the interest of the business to always try to resolve the matter before it goes to an ombudsman.

All providers in the non-regulated sector are funded by their industry. Providers in the regulated sector, such as the Financial Ombudsman, energy and telecoms are also funded by the industry, so that services are free to consumers. Others, such as the Local Government Ombudsman, are funded from public funds.

The Ombudsman process

In general, the complainant has a year in which to bring a claim and can do this 8 weeks from when a complaint was started or when a “deadlock letter” is received. A deadlock letter is requested from the provider stating that they will no longer correspond on the matter.

The differences between an Ombudsman and an ADR provider

To be an Ombudsman the organisation must be a member of the Ombudsman Association and meet a strict set of standards. An ADR provider essentially provides the same service but has lower standards.

There are some problems in the ADR/Ombudsman sector

There are many issues regarding ADR and Ombudsmen providers. These are mainly to do with the oversight by their approval bodies and are highlighted in my articles Government and regulators continue to fail on resolving consumer disputes and Landing in Court with Ryanair. These articles include links to the reports Ombudsman Omnishambles and More Ombudsman Omnishambles.

Alternative Dispute Resolution - approval and oversight in the loosest sense of the words...

Useful related posts

Top 20 Tips for how to complain effectively

5 myths about Ombudsman providers busted – a post that tackles misconceptions about an Ombudsman.

Why use the Financial Ombudsman? – Director of General Casework describes why and at what point you should contact the Financial Ombudsman Service.

Energy ombudsman shows how to keep heat on your supplier – the Chief Ombudsman at Ombudsman Services shares the traps people fall into and how to make a stronger case when submitting their claim. He looks at energy in particular but the points are valid for all sectors

Ask the Ombudsman: Kevin Grix CEO Dispute Resolution Ombudsman & The Furniture Ombudsman – a post looking at what this Ombudsman does with tips on preventing problems when you shop.

 

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ADR Ombudsman Topical

5 myths about Ombudsman providers busted

Ombudsman separating the truth from the misconceptions

Background to ADR and Ombudsmen

Alternative Dispute Resolution providers which include ombudsmen, provide services for business and consumers. When you can’t get your complaint resolved and the trader is a member of a scheme you can take your complaint to an ADR provider. Alternative Dispute Resolution: What it all means

In April 2018 the Government produced some research, Resolving Consumer Disputes. The findings included “…in cases where the ADR provider decided in favour of the consumer 83% of consumers perceived the process to be fair. This dropped to 17% in cases where the decision was in favour of the trader or a compromise. A similar, but less extreme, variation was seen for consumers who had used the courts (90% v. 53%).” Not exactly surprising.

lots of images of people shaking hands

The myths about ADR

Being in the world of consumer rights and stuff I talk about this area a lot. However, so often I hear the same inaccurate assumptions and beliefs from members of the public, including journalists. Sometimes these come from personal experience, sometimes guesses, sometimes from inaccuracies reported in the media and sometimes from I don’t know what! There are a lot of issues with the sector but these are mainly to do with oversight of the approval.

But here I am going to bust a few of those popular myths and hope it helps make things clearer! I’m using the term Ombudsman for ease but ADR provider is still the same in terms of these myths. (However, an Ombudsman has to be member of the Ombudsman Association which has higher standards than for non members as shown by their minutes of a meeting revoking the Retail Ombudsman’s membership. See The Retail Ombudsman is no more and the minutes in appendix  J of More Ombudsman Omnishambles.)

5 Commonly held beliefs about ombudsmen

1) Ombudsman are consumer champions

Nope. A consumer champion will fight for the consumer. An ombudsman is an unbiased service. Each case is looked at individually and decisions are made on the evidence provided.

2) Ombudsmen are paid by the traders so will always see in their favour

Nope. The traders pay yes. The alternative would be for consumers to pay at least a proportion! The traders pay a yearly fee plus a case fee. If the case goes to arbitration then in some cases, such as with the Furniture Ombudsman and an independent inspection is required, the trader pays for this too. Therefore it is actually in the traders’ interest to try and resolve the matter and for it not to go to the Ombudsman. If you look at providers’ annual reviews you will see the breakdown of percentages of cases won by trader etc. If the consumer were made to pay as well you might as well go to court and these schemes are there to provide an ALTERNATIVE! An Ombudsman service gets paid the same win or lose so there is no incentive to find in favour of either party.

As an example:

In the period November 2016 to October 2017, Ombudsman Services closed 49,117 energy complaints. Of those, it helped resolve 8% without investigating because the energy company was willing to provide the consumer with their desired resolution.

Of the complaints that Ombudsman Services investigated, it:

  • upheld 66% (finding that the energy supplier had done something wrong and had not done enough to put it right).
  • maintained 26% (finding that although the energy supplier had done something wrong, it had already offered a fair resolution to the customer).
  • did not uphold 8% of complaints, (concluding that there was no substance to the original complaint and the energy supplier had treated the customer fairly).

14/10/20 update more recent examples:

In 2019, of the complaints The Motor Ombudsman investigated it:

  • upheld 41% in favour of the customer
  • upheld 53% in favour of the business
  • 2% did not provide enough evidence to make a decision either way and
  • 4% were withdrawn

In 2019 of the complaints that The Furniture and home Improvement Ombudsman investigated:

  • 4192 (42%) consumer cases were not upheld
  • 3051 (58%) consumer cases were upheld in full or in part
Rip Off Britain talking getting redress with independent reports and ombudsmen

3) All ombudsmen are funded by Government

Nope. All providers in the non-regulated sector, such as furniture and airlines are funded by the industry. Providers in the regulated sector such as the Financial Ombudsman, energy and telecoms are also funded by the industry so that services are free to consumers. Others, such as  the Local Government Ombudsman are funded with public funds.

4) If the trader doesn’t want to pay up it won’t

In the regulated areas of finance, energy and telecoms if a trader doesn’t abide by an ombudsman’s decision then it will be reported to the regulator. Financial Conduct Authority, Ofgem and Ofcom. They will investigate and if found to be in breach of the rules can be shut down. In the non-regulated areas if the trader doesn’t abide by a decision they will be expelled from the scheme. The rate for non compliance is very low.

ADR scheme Year No. Reason for expulsion
The Motor Ombudsman 2016 3 2 Non-cooperation with scheme, 1 with outcome
The Motor Ombudsman 2015 8 Non-cooperation with scheme
The Furniture Ombudsman 2016 0 N/A
The Furniture Ombudsman 2017 1 Non compliance

There are however issues with compliance in the aviation sector, particularly with AviationADR members. See more details in More Ombudsman Omnishambles and Landing in Court with Ryanair.

5) There are lots of people who have gone to court when not happy with Ombudsman decision

If the Ombudsman doesn’t see in your favour it doesn’t necessarily mean it is wrong. It could be that you didn’t provide enough evidence and the same could happen in court. See Energy ombudsman shows how to keep heat on your supplier for an article from the Energy Ombudsman on how best to present your case.

The court option always remains open to you. But actually very few people do this. An ombudsman will usually be open to looking again at any case if you have more evidence. A judge can only look at evidence. There are cases where people go to the Small Claims Court, but often these don’t get reported accurately in the media which is misleading. For example, one recent case was reported in the media as the judge seeing in favour of the consumer where the ombudsman hadn’t. Actually it was because the trader didn’t attend and so a default judgement was made.

There are issues with ADR

Yup. Not a myth!

Westminster Business Forum seminar Next steps for consumer protection in the UK – dispute processes, enforcement and the consumer markets green paper. 15/11/18 Alternative Dispute Resolution – approval and oversight in the loosest possible sense of the words…

 

How approval bodies are failing to properly approve and monitor Alternative Dispute Resolution -

 

There are many issues regarding ADR and Ombudsmen providers. These are to do with the oversight by the approval bodies. See Government and regulators continue to fail on resolving consumer disputes and Landing in Court with Ryanair. These articles include links to reports (Ombudsman Omnishambles and More Ombudsman Omnishambles in particular). They also link to articles from Which? and The Independent that describe a number of problems which are not the fault of providers and provide  warnings about one provider, Consumer Dispute Resolution Limited run by Dean Dunham which runs RetailADR, UtitlitiesADR and AviationADR.

 

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