The government has proposed halving the time it takes for a complaint to be referred to the Financial Ombudsman Service from eight weeks to four weeks, in a bid to provide consumers with a resolution more quickly.
Currently, with most product categories, firms have up to eight weeks to consider a case and provide a final response before the customer is allowed to take the matter to FOS.
As part of its consultation on Reforming Competition and Consumer Policy, published today, ministers have proposed cutting this window to four weeks.
The consultation says: “Maintaining an upper limit of eight weeks has the potential to harm both consumers and businesses if active steps are not being taken to resolve the complaint.
“Evidence from the Consumer Green Paper suggested that protracted disputes can cause consumers stress and financial hardship and may harm businesses too by eroding trust and reducing satisfaction with business complaint handling, affecting customer retention.
“Government therefore considers there is a good case for halving the upper
threshold of eight weeks in markets where alternative dispute resolution (ADR) is mandatory so that businesses are incentivised to settle problems promptly and, if necessary, consumers can take complaints to ADR more quickly.
“Many regulators already support a significant reduction in this threshold and see the business and consumer benefits of doing so.”
MoneySavingExpert called for the timescales for referrals to be reduced in its 2017 report, Sharper Teeth and its 2019 report Justice Delayed.
MSE founder Martin Lewis says: “Finances are about far more than the money in people’s pockets.
“They impact the roofs above their heads, their mental health, relationships and general wellbeing.
“If firms behave unfairly, it can have a devastating impact, so we need urgent intervention.”
He adds: “In this digital age, it’s simply not good enough to have to wait eight weeks after contacting a firm before you can escalate your issue; your finances could be catastrophically damaged during that time.
“The reduction – so firms still have a month to sort things out first – seems a fair balance.
“The government has also accepted our calls to have a ‘fit and proper persons’ test for senior staff at ombudsmen and other alternative dispute resolution providers – people have a right to know that their complaints will be properly and effectively managed.
“Frankly, this hasn’t happened often enough.
“These are positive steps, though the biggest call we made – that the word ‘ombudsman’ should only be used for a body with statutory powers to hold all firms to account, creating a gold standard in dispute resolution – is still missing from the suggestions.”
