Lloyd's Maritime and Commercial Law Quarterly
THE BANKING OMBUDSMAN—FIVE YEARS ON
By P. E. Morris*
The growth of private-sector Ombudsmen, the birth of the banking Ombudsman scheme and some problem areas
Perhaps one of the most innovative developments in the commercial world during the past decade has been the spectacular growth in use of Ombudsmen as vehicles for the formal and informal resolution of grievances between private-sector organizations and their customers. The starting point for this development was unquestionably the creation by the insurance industry in 1981 of the Insurance Ombudsman Bureau (IOB). It is fair to say that the establishment and successful operation of a self-regulatory but independent Ombudsman in the insurance industry proved an influential factor in later decisions to institute Ombudsman schemes in other commercial sectors. Moreover, the institutional structure of the insurance scheme (whereby the insurance industry finances the IOB but is prevented from influencing the Ombudsman by an independent Council) has served as a blue-print for other schemes endeavouring to reconcile the potentially conflicting principles of voluntary self-regulation and operational independence of the agency entrusted with the task of complaint handling in a particular industry.
Since 1981 Ombudsmen have become a ubiquitous phenomenon in the commercial and professional environment. They have, in particular, proved remarkably popular in the financial services sector:1 Ombudsmen and similar institutionalized complaint handlers now operate in relation to the High Street banks,2 building societies,3 investment advice by self-regulatory organizations falling under the aegis of FIMBRA and IMRO,4 organizations subject to the jurisdiction of the Securities
* Lecturer in Law, Lancashire Polytechnic. I would like to thank Laurence Shurman for his assistance and co-operation during preparation of this article. Needless to say all views expressed in this article are, unless otherwise indicated, to be attributed to the author alone.
1. On which, see generally: J. Birds and C. Graham, “Complaints Mechanisms in the Financial Services Industry” (1988) 7 C.J.Q. 312; R. Thomas, “Alternative Dispute Resolution—Consumer Disputes” (1988) 7 C.J.Q. 200; and S. Webb, “The men who can shift mountains”, Financial Times, 17 March 1990.
2. For a critical account see: P. E. Morris, “The Banking Ombudsman” [1987] J.B.L. 131, 199.
3. Building Societies Act 1986, ss. 83 and 84; Sched. 12. For general accounts of the building societies scheme, see: C. Bell and J. W. Vaughan, “The Building Societies Ombudsman: A Customer’s Champion?” (1988) 132 S.J. 1478; J. W. Vaughan, “Building Society Complaint Schemes” (1988) 6 Trading Law 53; and S. B. Edell, “The Building Societies Ombudsman Scheme—A Legal Innovation” [1989] Conv. 253.
4. FIMBRA, The Investment Referee—The Referee’s Memorandum (1989); IMRO, The IMRO Referee (1989); and The Investment Referee, Annual Report 1989–1990.
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