Discrimination in Financial Services - the role of the Financial Ombudsman Service

by Anthony Robinson, Solicitor, Excello Law

December 9 2016 - The provision of financial services is often spoken of in terms of cut-throat competition, consumer choice and the need to provide ever more exciting and innovative products. Whilst this undoubtedly forms a part of the landscape, ultimately much of the financial services marketplace is made up of those products which are either mandatory in nature or form an indispensable part of most modern lives.

Financial services form an integral part of day-to-day life, and withholding these services can be both distressing and disruptive. The nature of the market is such that, on many occasions, they may be withheld for perfectly legitimate reasons, regardless of the inconvenience caused - such as the collapse of the subprime mortgage market - demonstrating the consequences of financial products not being subject to rigorous controls.

However, when financial services are withheld with less legitimate cause, the individual in question may have the right to seek redress, commonplace if the motivation for withholding the service or product in question is linked to what is described as a 'protected characteristic'.

The phrase 'protected characteristic' forms part of the Equality Act (EA) 2010, legislation combining the provisions of the Sex Discrimination Act 1975, the Race Relations Act 1976 and the Disability Discrimination Act 1995, bringing the various anti-discrimination measures together in the same place, making them easier to understand and in some cases strengthening them. The purpose of the EA was to protect individuals from discrimination in both the workplace and wider society, and the protected characteristics set out in the Act, the grounds upon which people might feel they have been discriminated against are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

Since the EA came into force in October 2010, individuals have had the right to pursue cases of discrimination on any of these grounds. In the first instance, individuals make a complaint to the organisation concerned and then, if they feel they have not received proper redress, seeking a solution via mediation or some other form of alternative resolution or, if all else fails, challenging the organisation in a court or tribunal. All of these options are open to individuals who believe they have been denied financial services on the basis of a protected characteristic. However, the Financial Ombudsman Service (FOS), is also able to act as a free, independent dispute resolution service. Therefore, by accessing the FOS' services, individuals can ensure that the body in question is fully aware of the discriminatory nature of their behaviour. Individuals can seek compensation, in the form of an apology, and where appropriate, a financial award taking into account any loss or damages entailed.

The FOS pursue a pragmatic approach, treating the legal responsibility which the EA has placed upon businesses to meet their customers' needs as a question of service provision. Furthermore, consumers who complain to the FOS regarding a protected characteristic, only rarely view their treatment as amounting to discrimination, or make mention of the EA. The cases undertaken by the FOS exemplify that on many occasions the businesses involved are guilty of discrimination by omission. Despite businesses being aware of their legal obligations, failure to take both simple and practical steps has resulted in an inability to meet these obligations. Ultimately, the business in question should make all reasonable adjustments required for their services to be accessible to people irrespective of protected characteristics. Anything less than this amounts to discrimination and the FOS will pursue the case, and has the power to award compensation of up to £150,000.

Much of the publicity surrounding the availability of financial services has focused upon the issue of age, and of people being denied products or services because they are deemed to be 'too old'. The complicating factor in such cases is that the EA itself makes an exception for age discrimination in the financial services sector. The FOS will pursue such a case if it considers that the business in question has based its' decision on age alone rather than on reliable and relevant risk assessments based upon that age.

The range of cases handled by the FOS covers the breadth of protected characteristics, and illustrates the many ways in which financial institutions, often unthinkingly, are guilty of discriminating against a range of individuals. A case of note includes a UK Citizen of Somali origin who had his request to open a bank account declined, and his passport retained by the bank for a week, on the stated grounds of 'problems with the current terrorist situation'. He eventually received £750 in compensation.

That the FOS operates on notions of fairness and reasonable behaviour, enables it to pursue cases which might not meet the more rigorous standards required for a claim in the Civil Court. Furthermore, the FOS offers a format and environment which many claimants find less intimidating, compared to actual court. Although FOS decisions are not legally binding, it can be assumed, particularly when they involve the payment of compensation, that they will impact upon future behaviour. The combination of the range and type of discrimination the FOS can deal with, coupled with a track record of achieving tangible positive results, highlights this as an option that lawyers should recommend to clients who believe that they have been unfairly treated.

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