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23 may 2023, 13:42
A considerable part of claims to appeal against the Financial Ombudsman’s decisions in court are related to the claimants’ aspiration to reduce the amount of penalties awarded by a Financial Ombudsman, who has no legal right to decrease them. In this respect, the appeal procedure requires improvement, as this situation has a negative impact on the protection of the rights of consumers of financial services, said Financial Ombudsman Svetlana Maximova, speaking at the 18th International Insurance Conference on the 23rd of May.
She informed that in 2022 the Financial Ombudsman had issued 88,188 substantive decisions against insurers. The insurance companies had appealed against 9036 Financial Ombudsman’s decisions in court, which constituted 26.2% of all decisions to satisfy consumers’ demands (fully or partially). And only in 5% of the instances the Financial Ombudsman’s decision had been overturned by court.
“If one looks at the situation from the consumer’s standpoint, is the game really worth it? One receives a positive Financial Ombudsman’s decision in one’s personal account, after which it is suspended because of an appeal by the financial institution. A year later, after the court rules, it turns out that the consumer was right. And in such a situation the institution actually loses a client,” the Financial Ombudsman stated.
She drew attention to the fact that disputes over the penalty amount cover more than half of the cases.
In this respect, she proposed changing the regulatory basis that would allow appealing against the Financial Ombudsman’s decision in part only. “Normally, the Financial Ombudsman’s decision would result in the payment of the due insurance premium and contractual penalties. Now, unfortunately, one has to appeal against the whole decision. In the course of the court trial, it turns out that the insurer is not disputing the amount of the insurance payout as decided by the Financial Ombudsman. They are only disputing the amount of the contractual penalty. As a consequence, the consumer does not receive the payment he is entitled to for a long time, until the court rules on it. In the end, the court reduces the penalty and leaves the payment the way it was set out in the Financial Ombudsman’s decision,’ Svetlana Maximova added.
