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ombudsman news

Q&As

featuring questions raised recently with our free, expert helpline for businesses and advice workers

payday problems?

Our debt advice charity has seen a big rise in calls to our helpline about payday loans. Sometimes it feels like more of these lenders crop up every day. Is this an area of concern for the ombudsman?

Although we do get complaints about payday lenders, they’re still in relatively small numbers. Having said that, in more than two thirds of these complaints we’re finding in the consumer’s favour.

One of the biggest concerns we have around payday lending is that we’re hearing that people aren’t aware they can come to us if things go wrong. To try and improve this situation, we hold regular events for advice agencies - to help us reach consumers who might not otherwise know about us. But we also speak to lenders too - making sure they understand our approach so that complaints can be avoided in the first place.

but is it fair?

You say that you decide complaints on the basis of what’s “fair and reasonable”. As a financial adviser running my own business, I’m regulated by the Financial Conduct Authority and have to comply with what they say. It seems that I could do everything my regulator requires me to, but the ombudsman could still say I haven’t been “fair” and uphold a complaint against me. How am I supposed to know what to do?

The law that set up the ombudsman service says that we have to decide each complaint on the basis of what we believe is fair and reasonable. But this doesn’t mean that we ignore the law or tear up the regulator’s rule book. We have to take account of the law, rules and good industry practice when we make decisions. So most of the time, what we say is in line with how a court would look at a case - or what the regulator would say.

But there are some situations when applying the law or rules strictly can actually lead to an unfair outcome. The law can sometimes be out of date or out of kilter - and can end up being too harsh on consumers. So, for example, until last year - when the law was finally changed to bring it more in line with the ombudsman approach - consumer insurance law "relied" on a century-old piece of legislation that related to commercial shipping.

Where we think there might be issues like these to consider, we follow our usual approach - which is to look carefully at the individual facts of the complaint and then decide what a fair and reasonable outcome would be.

Of course, an adviser’s role involves judgement too - and sometimes “ticking all the boxes” from a compliance point of view may not be enough. Taking a fair and reasonable approach from the outset could help avoid some problems arising in the first place.

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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.