Aggrieved consumers are increasingly turning to the Financial Services Ombudsman for satisfaction, and most are winning, writes Laura Slattery.

Consumers aren't suffering in silence when it comes to their wranglings with financial services providers. More and more people are approaching the Financial Services Ombudsman's bureau for help when they can't get the answer they want from the internal complaints department of whichever unfeeling corporate behemoth is making their life miserable this week.

Complaints to the financial ombudsman Joe Meade jumped 21 per cent in the first four months of the year, following a 14 per cent rise last year.

Although the increase in complaints can be explained partly by the fact that credit unions and stockbrokers came under the ombudsman's remit for the first time last year, it also seems as if consumers are becoming more assertive in their dealings with banks, insurance companies and other financial services providers.

Either that or the companies are increasingly lacking the kind of pro-consumer credentials that keep customers happy.

"I am neither a consumer advocate nor a consumer champion, but an independent arbiter of unresolved complaints," the ombudsman said at the launch of his annual report on Tuesday.

But with a budget of €3.2 million and the support of deputy ombudsmen Gerry Murphy and Caroline Gill, the Financial Services Ombudsman's bureau is an outlet that aggrieved consumers didn't have two years ago.

Unlike the two previous voluntary ombudsman schemes for insurance and credit institutions, Meade's investigations are backed up by statutory powers. These include the power to require the employees of financial services providers to give information under oath. This power hasn't yet been used, but another one, the power to obtain transcripts of phone recordings, has been used in four cases, the ombudsman revealed.

In three cases, the phone transcripts backed up the consumers' complaints, and even led to a €310,000 settlement from an insurance company that had refused to pay out on a life assurance policy on the grounds that the policyholder had not informed it about a particular health condition.

The phone records proved that the policyholder had given the insurer the full information and had been assured by an insurance company employee that there was no need to inform the company in writing.

Insurance companies failing to pay out on claims was the number one generator of complaints from consumers last year, accounting for 574 of the 3,795 complaints received.

This was followed by administrative mistakes or "maladministration" by banks and investment companies, which generated 556 disputes, and unfair treatment by banks and investment companies, which gave rise to 442 cases.

Breach of contract came fourth with 224 complaints, while insurance claims handling issues were responsible for 211 complaints.

Consumers can be confident of their chances of success: about 44 per cent of complaints are upheld. If complaints resolved through mediation are included, the percentage of cases settled in favour of the complainant rises to 60 per cent.

Meade says he has received co-operation from most financial service providers in his investigations.

"I have massive legal powers," he warns - obstructing the ombudsman is an offence liable to a fine of up to €2,000, a jail term of three months, or both.

So far Meade has resisted "naming and shaming" financial institutions, on the grounds that he might also have to name the complainants, which would deter people with legitimate complaints from coming forward. But he says a public consultation on the issue would be welcome.

The names of those financial services providers that have emerged into the public domain have done so because they have taken legal challenges against the ombudsman. (See panel)

In the meantime, the ombudsman has also referred several issues to the financial regulator for follow-up action.

These include the mis-selling of mortgage protection policies on investment properties, the selling of inappropriate products by an insurance company in a low-income area of Dublin and confusion about the role of intermediaries with connections to auctioneers and property companies.

"These Chinese walls are very blurred," says Meade.

"There has been confusion about whether intermediaries are acting in a personal capacity or as an auctioneer when they give advice. It is a serious, major issue that is cropping up."