The Financial Ombudsman (FOS) and complaints

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The problem with FOS decisions is that they can go wider than the law.

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We often get calls from car dealers who feel they are being pushed into a corner by a finance company following a customer complaint.

The usual scenario is that the customer has complained about a fault which the dealer has not upheld and so the customer has marched off to the finance company who worry about the complaint being escalated to the FOS.

The problem with FOS decisions is that they can go wider than the law which basically means they can come to any decision the person investigating thinks fit. This does lead to some bizarre and unfair decisions on which there is no appeal once the FOS system is exhausted.

However, the customer is entitled to complain to the finance provider as

  1. the car will belong to the finance company until the finance is cleared
  2. the finance company will have ‘joint and several liability’ for the vehicle.  

Unfortunately, many of the finance companies now take a soft approach towards the customer on the basis that

  1. they feel the FOS will rule against them regardless and
  2. if they pay the customer, they simply look to the dealer to reimburse them and so there is no real loss to them.

This can put the dealer at a disadvantage but this shouldn’t mean that dealers roll over and we quite often have backs and forths with finance companies on behalf of our clients which lead to the finance company either backing the dealer or coming to a mutually satisfactory deal on the loss or agreeing to take the hit themselves and not pursue our client at all. Obviously each case will have different facts but there are plenty of finance companies out there and so if one wants your business, you need to be sure that your account manager is as willing to look after your interests as much as their own and their customers.

Lawgistics members can get advice on problems arising from dealing with finance companies by contacting the Legal Team.

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Nona BowkisHead of Legal Services / SolicitorRead More by this author

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