Earlier this year it was finally reported that the government in Jersey and Guernsey had cooperated in creating a joint financial ombudsman scheme (the “Scheme”).

Since the announcement we are now “full steam ahead” and the Scheme will operate from an office in Jersey from 2015.

David Thomas, a lawyer, who was the UK Banking Ombudsman and subsequently a Principle Ombudsman with the statutory UK Financial Ombudsman Service has been appointed as the Chairman of the Office of the Financial Services Ombudsman. Appointment of the other board members is imminent, as is the recruitment of the Ombudsman itself.

The cost of the Ombudsman is to be paid by the financial services industry through a combination of levy and case fees.

The consultation paper on the details of funding closed last month and we wait to hear the details.

It is initially intended that the cost of the Ombudsman should be split equally between Jersey and Guernsey until there is enough data to identify how the work load is divided.

Summary

The two islands will lend the Ombudsman money for start-up costs. The Ombudsman will repay these loans from the levy that they collects.

At present it is proposed that half of the levy will be payable by banks. The remainder will be divided amongst other financial service providers.

It is proposed that the Ombudsman will cover complaints about financial services such as deposit taking, credit, money services, insurance, investments and pensions.

Trust companies and fiduciary businesses are exempt.

In Jersey the act/omission giving rise to the complaint must not be made before 1 January 2010 and the complainant must refer the complaint to the Ombudsman no later than 6 years from the act/omission or 2 years after the complainant should have known that he or she had reason to complain.

It is understood that the Scheme will publish a model complaint’s procedure for financial services providers.

The Scheme will handle the enquiries and will seek to resolve them. Mediation appears key in this process. If mediation fails then the Ombudsman will issue a final decision. If the complainant accepts the decision then it is legally binding on both parties and the Ombudsman can award up to £150,000.

As we learn more we will update you…watch this space