New consumer credit dispute service launched
Consumers could soon have access to a non-court based service to adjudicate on credit disputes, according to the Consumer Minister.
A new system, run by the Financial Ombudsman Service, will allow consumers who are unable to resolve disputes with their lender access to an impartial complaints body.
Though banks and building societies are already covered by the ombudsman, consumers with disputes with any other sort of lender until now only had recourse to the courts, which can be an expensive and lengthy process.
Announcing the plans, Gerry Sutcliffe, said: “This new system provides a much-needed and approachable alternative to court with a professional and expert body that already has specialist knowledge and a track record of handling consumer complaints about financial services.
“The Government is undertaking a massive shake up of the consumer credit industry to ensure the market becomes more transparent, fairer and trusted.
“Resolving disagreements fairly and quickly is a vital part of this process. Taking disputes to court can often be off putting and intimidating for consumers as well as expensive, time-consuming and stressful for business.”
The new system will also cover borrowers who took out a credit agreement before the start of the system will also be covered, providing the problem occurred after the start date of the new ombudsman scheme.
The National Consumer Council warmly welcomed today’s announcement. Its deputy policy director, Claire Whyley, said: “This is an important step forward in modernising Britain’s outdated credit laws and a lifeline for borrowers in dispute with their lender.
“NCC has been campaigning long and hard for a free ombudsman scheme for all borrowers. We believe this is the only sensible choice. Today’s announcement is a salvation for those who are excluded from mainstream credit, and who up until now, have only had going to court as an option for resolving disputes.
“One in three consumers prefers an ombudsman scheme to going to court or attending a special tribunal. People have told us that they want a system that will investigate complaints, is free and easy to use, and makes sure that any compensation they are awarded is paid.”
