Jersey's first Financial Services Ombudsman has been appointed. Douglas Melville is currently the Canadian Ombudsman for Banking Services and Investments and will take up his appointment on 1 June 2015. Once the Ombudsman Scheme is in operation the Ombudsman will adjudicate complaints from individual customers in relation to financial services provided in Jersey and will be able to make awards to return complainants to the position they would have been in had the problem not occurred.
Who will be able to complain?
Certain categories of persons will be eligible to complain to the Ombudsman including individuals, small businesses, charities, trusts and foundations. The service will be primarily available to persons lacking the resources or expertise to use other means to resolve complaints. The service will be available to complainants resident anywhere, not just to Jersey residents.
What can complaints be about?
Complaints are restricted to acts in the course of relevant financial services business provided in or from within Jersey. Relevant financial services business is defined broadly. However, certain classes of business that are not appropriate to be covered by the Ombudsman have been exempted by Order. The Financial Services Ombudsman (Exempt Business) (Jersey) Order 2014 came into force 25 November 2014. It exempts all business except for:
- deposit-taking business
- money service business
- the business of a functionary relating to a recognized fund
- general insurance mediation business
- insurance business
- investment business
- pension business
- credit business and
- ancillary business relating to the above.
Under the Order, most trust company business (except that relating to business, such as pension business, listed above), occupational pensions and fund business relating to funds other than recognized funds are outside the scope of the scheme.
When must complaints be made?
A complaint must be made to the Ombudsman within six years of the act to which it relates or two years after the complainant should have become aware of the cause for complaint. The complaint must relate to an act that occurred after 1 January 2010 and the financial services provider must have been given a reasonable opportunity (capped at three months) to consider the complaint.
However, a shorter time limit will apply, so that a complainant must refer the complaint to the Ombudsman within six months of receiving a final response on the complaint from the financial services provider, if the provider meets certain requirements for handling complaints. For the shorter time limit to apply the provider must notify clients of the availability of the Ombudsman scheme and the six month time limit. This shorter time limit is likely to mean that financial services providers amend their procedures accordingly.
What award may the Ombudsman make?
In many instances it is expected that complaints will be resolved without a financial award being made. However, the Ombudsman may require that the financial services provider compensate the complainant for their financial loss and any material distress or inconvenience. The maximum amount that the Ombudsman can award will be £150,000.
Is the Ombudsman's determination binding?
If the person making the complaint accepts the determination, it is binding. There is no right of appeal, so no further legal action can be taken on the same subject matter except for judicial review.
How will it be funded?
The scheme will be free to complainants and will be funded by financial services providers. It will be paid for by levies on financial services providers and by case fees charged to providers in respect of complaints against them.
Will Guernsey be involved in the scheme?
The Ombudsman Scheme will be a joint Jersey and Guernsey initiative. There will be a shared single office in Jersey with a shared staff and Board. There is some precedent for joint Channel Islands initiatives like this, for example the Channel Islands Competition Regulatory Authority.
When will the Ombudsman scheme be running?
While the Ombudsman will take up his appointment on 1 June 2015, the opening date for the scheme is not yet set and will be after the Ombudsman takes up the post. There are certain aspects that need the input of the Ombudsman first, both statutory obligations that the Ombudsman will need to fulfil (such as issuing of guidelines for complaints handling) and operational readiness. The provisions of Financial Services Ombudsman (Jersey) Law 2014 (the Law) which are not yet in force will be brought into force when the Ombudsman's office ready to open.
How can I be ready for the scheme?
You should consider whether you would like to take advantage of the six month time limit for complaints to be made and, if so, be prepared to make amendments to client-facing documents to notify clients that the scheme is available and to inform them of the six month time limit. You should also be ready to ensure that your procedures for complaints handling conform to the guidelines for complaints handling once it is published by the Ombudsman.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.