About ombudsmen

Process

Complaint-handling by the business

Typically, there is a specified process (and time limit) for the handling of complaints by businesses – so that:

  • as many disputes as possible can be resolved quickly
  • the number of disputes that have to be referred to the ombudsman scheme is minimised
  • it is clear when the consumer can refer the dispute to the ombudsman scheme

In all three models (statutory, underpinned by statute and voluntary), typically:

  • The complainant must complain first to the business (orally or in writing).  The business is required to provide a written response within a specified time
  • That written response must tell the complainant that, if he remains dissatisfied, he/she can refer the complaint to the ombudsman scheme
  • If the complainant is dissatisfied with the written response, or if the business fails to issue one within the specified time, the complainant can go to the ombudsman scheme

Depending on the way in which the scheme is established, the rules about how businesses must handle complaints may be specified in:

  • rules made by the relevant regulator
  • the rules of the ombudsman scheme
  • an industry code of practice

The ombudsman scheme may assist the early resolution of cases by businesses through:

  • publishing details of its approach to common disputes
  • giving advice to the public and to businesses, and/or
  • helping train citizens’ advice centres and businesses’ complaint departments
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Enquiry-handling and complaint-handling by the ombudsman scheme

Enquiries:  Ombudsman scheme handle enquiries, from both potential complainants and from businesses, as well as complaints.  Early explanations can often resolve misunderstandings and prevent disputes turning into full‑blown cases.  In some sectors, only about a quarter of enquiries actually turn into full cases.

Jurisdiction:  If a complaint is referred to the ombudsman scheme, it is first screened to check that it is within the ombudsman scheme’s jurisdiction.  If the complaint is within jurisdiction, typically, the case first goes to an investigator.  The case may then be resolved in a variety of ways. 

Early termination:  In some cases it is clear at the outset that a full investigation is not justified, for example where:

  • the case has already been decided by a court
  • the case raises legal issues that can only be resolved by a court, or
  • the business has already offered as much redress as the ombudsman scheme would award for what the complainant says the business did wrong

Mediation:  Some cases can be resolved quickly and fairly by mediation – where, assisted by an independent view from the ombudsman scheme about the circumstances in dispute, a settlement can be negotiated that both the consumer and the business agree. 

Investigation and recommendation:  If the case is not resolved by mediation, the investigator will investigate – taking an active role in deciding what evidence is required and calling for it – and will then recommend an outcome.  In a majority of cases, both parties accept the recommendation.

Decision:  In a minority of cases, one or other party rejects the recommendation.  After any further representations by the parties, the case is reviewed by an ombudsman, who issues a decision. So the ombudsman provides, in effect, an internal appeal stage.

Usually it is possible for the ombudsman to come to a conclusion about the case on the basis of what the parties have said plus the documents and other records – supplemented, where necessary, by talking to the parties by phone – without requiring a formal hearing.

The ombudsman decision is based on what the ombudsman considers to be fair in the circumstances of the case – taking into account not only what a court would do but also any industry code and what the ombudsman considers to have been good business practice in that sector at the relevant time.

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Typicallymore info, whether membership of the ombudsman scheme is compulsory or voluntary:

  • The ombudsman can award compensation up to a specified monetary limitmore info and/or require the business to do something in relation to the complainant (whether or not a court could)
  • If the complainant accepts the ombudsman’s decision, it is legally binding on the business and the complainantmore info
  • If the complainant does not accept the ombudsman’s decision, the complainant remains free to pursue the matter in courtmore info

The existence of a monetary limit reflects that the ombudsman process is designed to be less formal than a court, as well as that the decision is binding on the business only and is not subject to appeal (see below).  It is an acknowledgement that these advantages for the complainant may not be appropriate for higher-value issues.

The ombudsman may be empowered to award compensation not only for financial loss but also for:

  • damage to the complainant’s reputation caused by the business
  • distress and inconvenience that the business has caused to the complainant
  • costs incurred by the complainant, and/or
  • interest until the compensation is paid

But the ombudsman’s award is to compensate the complainant.  It does not set out to punish the business, and there are no exemplary or punitive damages.

There is usually no external appeal but, where the ombudsman scheme fulfils the relevant criteria of carrying out a public function, an ombudsman’s decision may be subject to judicial review.

A few ombudsman schemes have specific provisions under which, if an ombudsman agrees:

  • a specific legal issue may be referred to court; and/or
  • a ‘test case’ may be taken to court (if the business agrees to pay the complainant’s costs also)

 As mentioned above, there are more enquiries than cases, and only a minority of cases go on to an ombudsman.  But each stage has differing levels of complexity.  In one typical ombudsman scheme, the ‘gearing’ of case-handling staff among the three stages is about:

  • 15% enquiry-handlers
  • 75% investigators
  • 10% ombudsmen
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It is extremely rare for a consumer who 'lost' with the ombudsman to go to court – because the business will cite the ombudsman decision and because of the risk of an adverse costs order.
Binding as a result of statute (in the case of statutory ombudsman schemes) or by contract (in the case of other ombudsman schemes).
Depending on the sector, current monetary limits range from £5,000 to £150,000.
This is typical in UK ombudsman schemes covering complaints against private-sector businesses. Abroad, it is more usual for ombudsmen covering complaints against private-sector businesses to make non-binding recommendations. As previously explained, because public-sector bodies are directly or indirectly democratically-accountable, UK ombudsmen covering them can only usually make non-binding recommendations.
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