Typically, there is a specified process (and time limit) for the handling of complaints by businesses – so that:
In all three models (statutory, underpinned by statute and voluntary), typically:
Depending on the way in which the scheme is established, the rules about how businesses must handle complaints may be specified in:
The ombudsman scheme may assist the early resolution of cases by businesses through:
Enquiries: Ombudsman scheme handle enquiries, from both potential complainants and from businesses, as well as complaints. Early explanations can often resolve misunderstandings and prevent disputes turning into full‑blown cases. In some sectors, only about a quarter of enquiries actually turn into full cases.
Jurisdiction: If a complaint is referred to the ombudsman scheme, it is first screened to check that it is within the ombudsman scheme’s jurisdiction. If the complaint is within jurisdiction, typically, the case first goes to an investigator. The case may then be resolved in a variety of ways.
Early termination: In some cases it is clear at the outset that a full investigation is not justified, for example where:
Mediation: Some cases can be resolved quickly and fairly by mediation – where, assisted by an independent view from the ombudsman scheme about the circumstances in dispute, a settlement can be negotiated that both the consumer and the business agree.
Investigation and recommendation: If the case is not resolved by mediation, the investigator will investigate – taking an active role in deciding what evidence is required and calling for it – and will then recommend an outcome. In a majority of cases, both parties accept the recommendation.
Decision: In a minority of cases, one or other party rejects the recommendation. After any further representations by the parties, the case is reviewed by an ombudsman, who issues a decision. So the ombudsman provides, in effect, an internal appeal stage.
Usually it is possible for the ombudsman to come to a conclusion about the case on the basis of what the parties have said plus the documents and other records – supplemented, where necessary, by talking to the parties by phone – without requiring a formal hearing.
The ombudsman decision is based on what the ombudsman considers to be fair in the circumstances of the case – taking into account not only what a court would do but also any industry code and what the ombudsman considers to have been good business practice in that sector at the relevant time.
Typically, whether membership of the ombudsman scheme is compulsory or voluntary:
The existence of a monetary limit reflects that the ombudsman process is designed to be less formal than a court, as well as that the decision is binding on the business only and is not subject to appeal (see below). It is an acknowledgement that these advantages for the complainant may not be appropriate for higher-value issues.
The ombudsman may be empowered to award compensation not only for financial loss but also for:
But the ombudsman’s award is to compensate the complainant. It does not set out to punish the business, and there are no exemplary or punitive damages.
There is usually no external appeal but, where the ombudsman scheme fulfils the relevant criteria of carrying out a public function, an ombudsman’s decision may be subject to judicial review.
A few ombudsman schemes have specific provisions under which, if an ombudsman agrees:
As mentioned above, there are more enquiries than cases, and only a minority of cases go on to an ombudsman. But each stage has differing levels of complexity. In one typical ombudsman scheme, the ‘gearing’ of case-handling staff among the three stages is about: