Pros & Cons – FOS vs Legal Action

For many of our members the FOS remains an option, however the route has become complicated by the FCA court action, so we want to provide you with a list of pros and cons to pursuing your complaint through the Ombudsman.

Even if you decide to pursue your complaint through the Ombudsman, you can avail of Mishcon’s legal advice to date but only after agreeing to their retainer letter.

Of course there are particular strengths and weaknesses of every claim and those should be weighed on an individual basis.

Financial Ombudsman Service

Pros of the FOS

  • Free to use. There’s no charge to use the FOS complaints resolution service
  • The FOS uses the law of the land, industry good practice and regulators rules and guidance to inform its decision
  • No need for legal advice, you can put your complaint in your own words
  • If the FOS finds in your favour, the company must comply with their judgement

Cons of the FOS

  • Can take a long time. This is complicated by the fact the FOS will need to wait for the FCA court action to be completed because the FOS takes their guidance from the FCA
  • Your awards are limited to what the BI policy covers and no damages that might be available under the Enterprise Act
  • If you take legal advice, you will have to pay for it, but you won’t be represented before the FOS
  • The FOS judges cases on a fairness basis, not necessarily what the law states, though they will take guidance from the FCA and related cases
  • The FOS acts independently and you will have no control over their investigation
  • There may not be an investigation at all, the FOS has the power to just look at the facts of the case and settle it from those.
  • Decisions may differ from case to case, so not every complaint will result in the same compensation as another.

Legal Action

Pros of Legal Action

  • Can approach Hiscox directly on your behalf
  • Will be able to claim for some legal costs and additional damages under the Enterprise Act
  • Can act much quicker to get to arbitration
  • No expense up front and if a decision is given against you, no fees required
  • Strength of major City firm with full litigation funding
  • Relies on legal precedent and contractual wording of your policy
  • We will be able to hopefully get rulings on most fact patterns of claims, whilst of course not being able to guarantee a precedent for your particular claim.

Cons of Legal Action

  • Will incur a cost, though it is deducted from the final award
  • You may be liable for legal funding costs if you leave the action early
  • Very hard to challenge an arbitration decision
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