Is it in or out?

Sarah talks about the ‘ins and outs’ of jurisdiction and shares her tips for dealing with it.

Jurisdiction can be such a dry subject, and it’s not everyone that is going to get excited at the prospect of a blog about it, but it’s an important one and will pay dividends if you take the time to wade through this subject.

Now DISP has a lot of information in it, but it also represents something of a dirty, great big yawning chasm of what’s not said, which means that on occasions businesses and the Ombudsman Service have to ‘interpret’ what the meaning behind what’s said.

And to some extent this applies to jurisdiction, so we can understand a business hesitating to get its hands dirty in this subject, especially as a business can’t say categorically whether a complaint is outside the Ombudsman’s jurisdiction. Only the Ombudsman can say that, but there does seem to us that opportunities are being missed by ignoring the subject.

Why you should check jurisdiction

It makes sense for a business to ‘know enough’ about jurisdiction to be able to flag up to a customer that there might be an issue with the Ombudsman Service being able to consider their complaint.

To be clear here though, we’re not advocating using this knowledge to essentially put a customer off going to the Ombudsman. That wouldn’t be acceptable in any context, because the customer must have the autonomy to take matters to the Ombudsman regardless of what the outcome might be.

But, there is nothing wrong with familiarising yourself with the rules and mentioning in the final response letter that you think the complaint might not be one that the Ombudsman Service can consider, with a plain English explanation of why that might be the case. This then fully informs the customer of the relevant issues and manages their expectations in terms of what may or may not be possible. But it also means that your Final Response Letter, should it make its way to the Ombudsman Service, acts as your very first ‘defence’ to the complaint.

In essence, it tells the investigator that they might want to consider the jurisdiction before they get stuck into the merits. Now, they should be doing this anyway, but there’s not harm in flagging it up in your Final Response Letter for the benefit of the customer and the investigator.

And besides DISP 3.2.3 states that where a business flags this up, the Ombudsman Service will consider it…so it makes sense to do just that in the right way.

Checking your understanding

It’s all well and good flagging jurisdiction, but you need to know what it is you’re flagging up. Now, this blog doesn’t have the word count to go into this in masses of detail, because there is simply too much to say, but let’s go over the basics and if your interest is piqued, then you can join us for our webinar on 25 November 2019 at 12pm or sign up for one of our training sessions in 2020 to help you out more with this.

Put simply (as defined under 2.2.1) these are the areas that jurisdiction can apply to:

  • Activities – is it a regulated activity, such as selling investments, administering a mortgage or debt collecting?
  • Where the activity took place – Was it in the UK, the EEA for some other activities, or has the business passported in to be covered by the Financial Ombudsman Service?
  • Customer eligibility –Can they raise the complaint with the Ombudsman Service? It’s important to check this against the DISP rules.
  • Timeliness – has the complaint been made in time, within six months or does it fall within ‘6&3’?

There’s a lot that can be said about these sections, but ‘activities’ and ‘where it took place’ are squarely within the business responsibility here. As a business you should know this information about your business – because if you don’t then that’s a massive cause for concern.

Is the customer able to take their complaint to the Ombudsman Service?

However, when it comes to whether that customer can make that complaint DISP there is a mass of information under DISP 2.7 which provides you with a long list of criteria that a customer must fall under in order to be have their complaint considered by the Ombudsman Service.

Now I could write a long diatribe on who does and doesn’t fall under this, but flipping heck it would be dull, so, instead here’s a very quick quiz for you. Try it without reference to the DISP rules:

Who out of this list is able to take their complaint to the Financial Ombudsman Service?

  • A person who applied, but was turned down for a loan;
  • Someone who has received advice to invest in an Unregulated Collective Investment Scheme (UCIS);
  • The parents of a customer who act as guarantor on their mortgage;
  • A charity that has a problem with its bank account;
  • A small business that has experienced issues with a loan

If you said all of them, you would be right, although there are some small points that might have to be mopped up in terms of the details, in principle all of these examples would be considered as potentially within the Ombudsman Service’s jurisdiction (more about the ‘potentially’ at the end of this blog!).

It’s all in the timing

No doubt you’ll all know the 6 month rule in terms of a customer being out of time if they don’t complain 6 months after the date of the Final Response Letter…although I have met businesses that haven’t put the Ombudsman referral rights in their Final Response Letter. If you don’t, please make sure you do. You can’t rely on something that hasn’t been communicated to the customer.

And then we have ‘6 & 3’…now I have seen quite a few businesses get themselves into a bit of a pickle on this one. And again it’s down to the subjectivity of when a customer ‘ought’ to have become aware of the issue.

So here are a couple of rules of thumb to think about:

  • Put yourself in the customer’s shoes – what they might or might not know or understand. Not everyone will understand the intricacies of an investment and how it works – so does the information you’re relying on really make them aware, or is it that you understand it because you know the process and what the product is?
  • Does the documentation back up what you’re saying – quite often a business would rely on something because it says ‘x, y and z’, but when reading it, it’s not cut and dried. So, on balance would a customer take your understanding from the documentation you’re relying on?

Knowing the difference between a dismissal and jurisdiction

And then finally we have ‘dismissal reasons’. These reasons are different to jurisdiction and aren’t ever anything you would really concern yourself with as a business. That’s because only the Ombudsman can consider these reasons for dismissing the complaint:

Originally there were no less than 17 reasons that an Ombudsman could choose to dismiss a complaint, but thankfully after 9 July 2015, the list was pared down to these:

  • Is it ‘frivolous or vexatious’?
  • The complaint has been dealt with or is being dealt with by another Alternative Disputes Resolution scheme
  • It’s already been to court and a decision was made
  • The complaint is currently going through court proceedings, unless there is a ‘stay’ put in place so that the Ombudsman can consider it
  • Dealing with the complaint would impair the effective operation of the Ombudsman Service

Again if there are court proceedings or it’s being considered by another ombudsman scheme then it’s worth flagging it up with the consumer and the Ombudsman Service through your Final Response Letter. However, the first and the last point aren’t something a business would be able to really comment on, given their subjectivity.

 Flagging it up      

And this is why we suggest that you flag the jurisdiction up as a potential issue. It’s not to say that in your communication with your customer you have to say ‘its’ out of the Ombudsman Services’ jurisdiction, because it’s only ever going to be ‘potentially’ until the ombudsman confirms one way or the other.

However, in flagging it up in the Final Response Letter to the customer, you are keeping them fully informed, but also flagging it up as an issue to the investigator. And while it should always be the first consideration, it makes it very unavoidable if this has been flagged up by you in your very first complaint communication.

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