Latest news with #FinancialOmbudsman
Daily Mail
2 days ago
- Business
- Daily Mail
Financial Ombudsman set to slash the 8% interest on compensation firms have to pay when things go wrong
The Financial Ombudsman is plotting a major shake-up of how much interest firms have to pay on compensation pay outs which would make it far less generous for consumers ruled to have been treated unfairly. Currently, firms are ordered to pay a flat 8 per cent interest on compensation awards. But the Ombudsman has announced it is launching a consultation to review the amount of interest firms pay on compensation awards after a Call for Input with the Financial Conduct Authority where it sought views on how to update the dispute resolution system. It could push through new rules that would see the interest on compensation paid to people when things go wrong from 8 per cent to the Bank of England base rate plus 1 per cent, which would currently mean a far lower 5.25 per cent. If a consumer is found to have lost out financially because of an error by a financial firm, the FOS can force the business to pay compensation, plus interest on top. There are different types of interest the FOS can order businesses to pay, and one of these compensates consumers for losing out financially - such as where an insurance claim has been wrongly turned down. In these cases, the Ombudsman can currently order the firm to pay 8 per cent interest on top of the compensation for the period their customer was out of pocket. It can also tell a business to pay 8 per cent interest if it doesn't pay compensation on time. However, for new complaints submitted to the service, the Financial Ombudsman is recommending changing the interest rate so it tracks the Bank of England's base rate plus 1 per cent. The base rate currently stands at 4.25 per cent, the lowest level in two years, and markets are pricing in three more cuts before the end of the year. With the base rate at its current level, they amount of interest firms could be ordered to pay if it is 5.25 per cent. This would fall if the base rate continues to drop. The base rate would be calculated as an average rate over the period that the money was due until the date redress payment is made. The Financial Services Ombudsman said: 'Feedback from the Call for Input suggested that this interest rate could be better aligned with, and reflect, market conditions.' It comes as The Financial Ombudsman has been facing increasing demand for its service in recent years. Last year it resolved more than 200,000 complaints. James Dipple-Johnstone, interim chief ombudsman at the Financial Ombudsman Service, said: 'We think reform of the dispute resolution system is crucial to make it fit for the future. 'That is why we are acting on feedback from our Call for Input and reviewing a range of our processes to ensure that they work for a modern economy.' The consultation will run until 2 July 2025.
The Independent
2 days ago
- Business
- The Independent
Ombudsman proposes changes to interest levels applied to compensation
The Financial Ombudsman Service (FOS) is proposing to change the interest rate applied to the compensation awarded to consumers, to tie it to the Bank of England base rate. If someone is found to have lost out because of their financial firm's errors, the ombudsman can order the business to pay compensation, plus interest. There are different types of interest businesses can be directed to pay, and one of these compensates consumers for being 'deprived' of money (not having it available to use) such as when it finds a claim has been wrongly turned down by a financial firm. The ombudsman can currently direct businesses to pay 8% interest on top of the compensation for the period their customer was out of pocket. It can also tell a business to pay 8% interest if it does not pay compensation on time. But the service said feedback suggests the interest rate 'could be better aligned with, and reflect, market conditions'. For new complaints submitted to the service, it is recommending changing the interest rate so it tracks against the Bank of England's average base rate plus one percentage point. The base rate would be calculated as an average rate over the period that the money was due until the date redress payment is made. The consultation is gathering feedback on this recommendation as well as other potential options and proposals for implementation. The Bank of England base rate currently sits at 4.25%, its lowest level in two years. Economists have speculated that two more reductions could happen this year. James Dipple-Johnstone, interim chief ombudsman at the FOS, said the service welcomes feedback 'on whether our proposed new interest rate strikes the right balance between simplicity, fairness and proportionality'. The consultation will run until July 2 and the service said further proposals around its service will be brought forward in the summer.
Telegraph
4 days ago
- Business
- Telegraph
Furious Boohoo and Debenhams customers waiting a month for refunds
Boohoo customers are facing unexplained delays for refunds of up to a month as the fashion retailer attempts to navigate financial pressures. In social media posts, dozens of customers of Boohoo brands, which also include Debenhams and PrettyLittleThing, have complained that they sent back goods as long as four weeks ago but their money has not been returned. One Debenhams customer said that she had not been given a £160 refund for a wedding dress, which had been returned to the retailer on May 1. She said: 'I have now escalated this to the Financial Ombudsman as this is utterly and completely awful. 'No other company takes over a month to refund returns, this includes companies who have to ship from abroad.' Another told Boohoo on X: 'Your service is disgusting! I ordered and returned some items within 2 days of getting them. My refund was supposedly actioned on May 20, we're now June 1 and still nothing? And supposedly no complaints procedure? Awful company!' A third said: 'I sent a return back three weeks ago, you've sent me an email to say you've had it over a week and still haven't issued a refund! Won't be using ever again.' On its website, Boohoo said that refunds for returns can take up to 14 days from the date goods were posted back. A company spokesman acknowledged that it was paying refunds more slowly than usual, but did not offer an explanation for the delays. Boohoo said: 'We're aware that some customers haven't received their refunds as quickly as usual and we're working to resolve that.' Customers are facing frustration at the same time as Boohoo is attempting to refinance its debts against a backdrop of falling sales and tough competition from Chinese rivals Shein and Temu. Boohoo, which has announced plans to adopt Debenhams as its corporate brand, is in talks to replace up to £175m of borrowing with new loan commitments that are expected to come at a higher cost. An agreement threatens to increase the pressure on the business, which has been making deep job cuts and in March reported a 16pc drop in sales. Clive Black, a retail analyst at Shore Capital, said customers and investors were likely to take note of the delays to refunds. He said: 'It will ring the alarm bell. Given that they are an online business with a customer base that is young and savvy on social media, it won't take long to get around like a virus. It can be a vicious circle. 'Businesses will use all kinds of tactics ... in terms of delaying movement of cash, but this is a big no-no. It can be very brand-damaging. It's a sign of weakness.' Boohoo declined to respond to Mr Black's comments and did not answer questions about its cash position. It did not comment on whether delays to refunds were linked to its financial challenges or say how long it expected them to continue. A spokesman said Boohoo was 'pleased with the progress we're making'. The company said in March it expected to report adjusted underlying earnings of £40m for the year that ended in February. It repaid £50m of a £97m loan in December using the proceeds of a share placing. Boohoo, which was co-founded by executive chairman Mahmud Kamani, now includes the labels Wallis, Burton, Misspap, Coast, Oasis, Dorothy Perkins and Warehouse, as well as Debenhams.
Scoop
28-05-2025
- Scoop
Don't Let Money Mishaps Freeze Your Fun: FSCL's Top Winter Travel Tips
Press Release – FSCL The Financial Ombudsman service regularly receives complaints from holidaymakers who run into trouble with financial services. As winter approaches and many New Zealanders plan mid-year overseas getaways, Financial Ombudsman service, Financial Services Complaints Limited (FSCL), is reminding travellers to take extra care with travel cards, currency exchange, and travel insurance. The Financial Ombudsman service regularly receives complaints from holidaymakers who run into trouble with financial services. 'Every year we see cases where a simple mistake, oversight, or lapse in security leads to significant financial loss for holidaymakers,' says Susan Taylor, Financial Ombudsman. 'A little preparation can save a lot of stress and money.' Travel cards Travel cards are a convenient way for travellers to store foreign currency. Keeping cards secure and being vigilant when depositing funds averts issues. If you don't keep your card safe or allow someone else to take possession of it, you may not be refunded for fraudulent transactions. Elijah* found this out on a recent holiday in Europe, after losing €3,000 when using his travel card to purchase drinks at a bar. Transferring foreign currency also requires care. Entering even a single digit incorrectly can send your money to the wrong account. 'Retrieving funds sent to the wrong account can be challenging, as it relies on the recipient returning the money, at the request of the travel card provider,' says Ms Taylor. Currency exchange Complaints about money exchange are also increasingly common. To avoid unexpected charges, it pays to compare exchange rates between retailers and remember that exchanging money at an airport is usually more expensive. Travel insurance Pre-existing medical condition exclusions are also a cause of problems for travellers when they think they're covered for illness while travelling but find out later they're not. 'Many people get caught out when insurers classify a condition as pre-existing, even if a formal diagnosis hasn't been made,' says Ms Taylor. This was the case for David* and Meena*, who had to pay their own medical and additional travel costs when David had emergency surgery on his kidney during the couple's holiday in America. The insurer declined the claim because the operation was due to a pre-existing medical condition that David hadn't disclosed—meaning it was not covered by the policy. David had been diagnosed with kidney stones before his holiday, but was told by the hospital's medical staff that the stones were small and didn't need treatment at that time. David assumed that nothing more could be done, and his symptoms would resolve on their own. Because he hadn't disclosed any of this to the insurer, he had to pay for the associated medical expenses and costs of cutting his holiday short. Travellers should read their travel policy wording carefully to understand what cover is included in case they need to make a claim. 'Unexpected challenges, extra expenses incurred while travelling, or being ill on holiday can be very distressing, so it pays to take time to select financial products carefully, review any terms and conditions, and always disclose any health conditions to your insurer, even if you don't think they're serious,' says Ms Taylor.
Scoop
28-05-2025
- Scoop
Don't Let Money Mishaps Freeze Your Fun: FSCL's Top Winter Travel Tips
Wednesday, 28 May 2025, 7:18 pm Press Release: FSCL As winter approaches and many New Zealanders plan mid-year overseas getaways, Financial Ombudsman service, Financial Services Complaints Limited (FSCL), is reminding travellers to take extra care with travel cards, currency exchange, and travel insurance. The Financial Ombudsman service regularly receives complaints from holidaymakers who run into trouble with financial services. 'Every year we see cases where a simple mistake, oversight, or lapse in security leads to significant financial loss for holidaymakers,' says Susan Taylor, Financial Ombudsman. 'A little preparation can save a lot of stress and money.' Travel cards Travel cards are a convenient way for travellers to store foreign currency. Keeping cards secure and being vigilant when depositing funds averts issues. If you don't keep your card safe or allow someone else to take possession of it, you may not be refunded for fraudulent transactions. Elijah* found this out on a recent holiday in Europe, after losing €3,000 when using his travel card to purchase drinks at a bar. Transferring foreign currency also requires care. Entering even a single digit incorrectly can send your money to the wrong account. 'Retrieving funds sent to the wrong account can be challenging, as it relies on the recipient returning the money, at the request of the travel card provider,' says Ms Taylor. Currency exchange Complaints about money exchange are also increasingly common. To avoid unexpected charges, it pays to compare exchange rates between retailers and remember that exchanging money at an airport is usually more expensive. Travel insurance Pre-existing medical condition exclusions are also a cause of problems for travellers when they think they're covered for illness while travelling but find out later they're not. 'Many people get caught out when insurers classify a condition as pre-existing, even if a formal diagnosis hasn't been made,' says Ms Taylor. This was the case for David* and Meena*, who had to pay their own medical and additional travel costs when David had emergency surgery on his kidney during the couple's holiday in America. The insurer declined the claim because the operation was due to a pre-existing medical condition that David hadn't disclosed—meaning it was not covered by the policy. David had been diagnosed with kidney stones before his holiday, but was told by the hospital's medical staff that the stones were small and didn't need treatment at that time. David assumed that nothing more could be done, and his symptoms would resolve on their own. Because he hadn't disclosed any of this to the insurer, he had to pay for the associated medical expenses and costs of cutting his holiday short. Travellers should read their travel policy wording carefully to understand what cover is included in case they need to make a claim. 'Unexpected challenges, extra expenses incurred while travelling, or being ill on holiday can be very distressing, so it pays to take time to select financial products carefully, review any terms and conditions, and always disclose any health conditions to your insurer, even if you don't think they're serious,' says Ms Taylor. * Names have been changed. © Scoop Media
