Alternative to litigation

Kliger Partners’ litigation department offers many services to its clients that are designed to reduce the time and expense of litigation or that may avoid litigation altogether.

One option is to pursue a claim before the Financial Ombudsman Service which has jurisdiction to hear claims against financial services providers, including banks, and insurance companies.

Decisions made by the Ombudsman are usually by way of a panel of experts and there is an informal mediation process that will precede a dispute being decided.

The Financial Ombudsman Service (FOS)

The Financial Ombudsman Service was created on 1 July 2008 when the Insurance Ombudsman Service, the Financial Industry Complaints Service and the Banking and Financial Ombudsman Service were consolidated. The FOS independently and impartially resolves disputes between consumers — including some small businesses — and participating financial services providers.

Have your cake and eat it too

When a claim is referred to the Ombudsman, its decision is binding on the insurer or financial institution but not on the party making the claim. The party making the claim has the right to reject a decision made by the Ombudsman and resort to litigation.

Advantages

The benefits to making a claim with the Ombudsman instead of resorting to litigation include:-

1. The FOS is free to consumers but it charges fees to the insurers, banks and finance companies, which in turn places pressure on them to settle claims.
2. No hearings, and therefore no barristers’ fees.
3. As of 1 January 2010, the FOS will have jurisdiction to hear claims of up to $500,000, however, it can only make an award of up to $280,000 in favour of the party making the claim.
4. A history of the resolution of disputes shows that claims with merit have almost always been resolved by the FOS, with the majority of claims decided in favour of the consumer.
5. Enabling the issues, defences and documents of the financial company or insurer to be aired and obtained prior to litigation.

Disadvantages

There are some disadvantages to bringing a claim before the FOS, they include:

1. It can take considerable time for the FOS to consider a dispute and provide a decision.
2. Cost of legal representation. Kliger Partners has however had success recovering some of its clients’ costs via negotiation as part of an overall settlement of a dispute before the FOS.
3. Limit of award to $280,000.

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