Part 10 — Page 1

Procedural Failures

in

the Financial Ombudsman Process

When Regulatory Review Replicates

the

Harm, It Is Meant to Prevent

The Financial Ombudsman Service (FOS) exists to provide independent, fair, and transparent resolution when banks fail to meet their obligations. Its investigators and Ombudsmen operate under FCA rules, including DISP and FG21/1.

 

However, the events documented in this case reveal multiple procedural failures within the FOS investigation itself.

10.1

 

Failure to Apply DISP 3.6.1R

 

DISP 3.6.1R requires the Ombudsman to consider all relevant evidence, regardless of when it emerges.

 

The investigator declined to consider:

  • new information
  • safeguarding context
  • vulnerability issues
  • emotional harm
  • ATM limit reduction
  • impact on access to money

This contradicts DISP 3.6.1R.

10.2

 

Misapplication of DISP 2.8.1

 

The investigator stated:

 

“I won’t be able to consider these points…”

 

DISP 2.8.1 governs acceptance, not evidence scope.

 

Restricting scope:

  • excluded safeguarding
  • excluded vulnerability
  • excluded emotional harm
  • undermined fairness

10.3

 

Lack of Evidence Transparency

 

The investigator stated:

 

“Some of the information I have relied on has been accepted from the bank in confidence.”

 

No explanation was provided regarding:

  • what this confidential information consisted of
  • why it was withheld from the complainant
  • how it was relevant to the complaint
  • whether it was accurate, appropriate, or proportionate

This prevented the complainant from:

  • understanding the investigator’s reasoning
  • challenging inaccuracies or assumptions
  • verifying whether the process was fair
  • identifying whether the bank had provided irrelevant or excessive material

Reliance on unseen evidence undermines transparency and contradicts the principles of procedural fairness

 

10.3A

Minimal Interaction With Halifax, Lloyds & Bank of Scotland

 

The complainant’s relationship with Halifax/Lloyds/Bank of Scotland has been extremely limited over many years. 

 

The account was used only for:

  • occasional cash deposits
  • occasional cash withdrawals
  • basic counter transactions
  • brief greetings with staff (“good morning”)

There were:

  • no standing orders
  • no direct debits
  • no overdraft usage
  • no credit products
  • no debt issues
  • no complaints
  • no meetings with staff or managers
  • no complex interactions
  • no behavioural incidents
  • no safeguarding concerns raised by the complainant

The account was, in practical terms, inactive and of minimal use.

 

Given this limited interaction, it is unclear what “confidential” information Halifax could legitimately have supplied. The complainant had no history of:

  • problematic conduct
  • vulnerability disclosures
  • safeguarding incidents
  • behavioural concerns
  • financial difficulty
  • unusual account activity

This raises serious questions about:

  • what information Halifax provided
  • why it was marked confidential
  • its relevance to the complaint
  • its appropriateness and accuracy
  • the volume of material supplied
  • any misinterpretation by the investigator
  • the lawfulness of relying on undisclosed evidence

The complainant was denied the ability to see, understand, or challenge this material, despite it influencing the investigator’s findings.

 

Impact on Fairness

 

The use of undisclosed evidence — particularly when the complainant’s interaction with the bank was minimal — creates a significant imbalance. It prevents the complainant from:

  • correcting errors
  • identifying misinterpretations
  • addressing assumptions
  • ensuring accuracy
  • ensuring proportionality

This lack of transparency contributed to procedural unfairness and undermined confidence in the investigation.

 

The complainant’s first significant interaction with Halifax occurred when attempting to withdraw £20,000 to pay for essential home repairs and to provide modest financial support to grandchildren.

 

Prior to this, the account had only ever been used for small discretionary spending and occasional savings. This routine financial pattern had never raised concerns.

 

The escalation that followed was therefore disproportionate and inconsistent with the complainant’s long-standing, responsible financial behaviour.

 

10.4

 

Incorrect Factual Assumptions

 

The investigator’s findings contained multiple factual inaccuracies that materially affected the outcome. These included:

  • incorrect identification of when the family member was present
  • misrepresentation of the reasons for the withdrawal
  • confusion regarding the sequence of events
  • misinterpretation of statements made by the complainant
  • overlooking the safeguarding context surrounding the complainant’s circumstances

These errors demonstrate a failure to establish the factual basis of the complaint. Incorrect assumptions, once embedded into the reasoning, shaped the investigator’s conclusions and contributed to an outcome that did not reflect the reality of the complainant’s situation.

 

10.5

 

Misinterpretation of Vulnerability (FG21/1)

 

The investigator stated:

 

“I can understand why the bank had concerns because another adult was with you.”

 

This statement reflects a fundamental misunderstanding of vulnerability guidance under FG21/1 and safeguarding practice more broadly. The reasoning:

  • treats the presence of a supportive adult as suspicious
  • contradicts Halifax’s own records
  • contradicts FG21/1, which requires additional care, not heightened suspicion
  • contradicts safeguarding principles, which recognise that vulnerable adults often require accompaniment for mobility, communication, or safety reasons

FG21/1 makes clear that firms must:

  • recognise indicators of vulnerability
  • avoid assumptions that disadvantage vulnerable customers
  • provide enhanced support
  • ensure decisions do not cause foreseeable harm

In this case, the investigator interpreted a safeguarding measure as a risk factor. This inversion of vulnerability guidance contributed to an unfair assessment and reinforced the procedural issues identified in earlier sections.

 

10.6

 

Minimisation of Emotional Harm

 

The investigator described the complainant’s experience as “inconvenience,” despite:

  • public questioning
  • refusal of privacy
  • unjustified threats of account freezing and fraud‑team intervention
  • emotional distress
  • impact on a vulnerable adult

Minimisation is a safeguarding failure.

10.7

 

Unjustified Fraud‑Team Threat

 

Across two branch visits and subsequent telephone contact, Halifax warned the complainant that their account could be frozen and the fraud team might intervene, despite:

  • no evidence of fraud
  • no irregular account activity
  • no safeguarding triggers
  • the complainant being present with full identification
  • lawful withdrawal requests within permitted limits

The complainant raised this issue repeatedly in their Halifax, FO complaint, and the complainant’s escalation. Despite this, neither the investigator nor the Ombudsman analysed the threat, its justification, its proportionality, or its emotional impact.

 

This omission minimised the safeguarding implications of the threat and replicated the emotional harm caused at branch level.

 

10.8

 

Lack of Independent Analysis

 

Large sections mirrored Halifax’s narrative. There was little evidence of:

  • scrutiny
  • balancing
  • critical analysis
  • safeguarding consideration

10.9

 

Inconsistent Reasoning

 

Contradictions included:

  • “I considered everything” vs “I won’t consider your additional points.”
  • “Halifax acted fairly” vs “Halifax apologised.”
  • “Presence was concerning” vs Halifax’s own records.

10.10

 

Failure to Respect Communication Preferences

 

The complainant stated email preference. The investigator:

  • requested phone calls
  • repeated requests
  • continued contact after escalation

This breaches FO service standards.

 

10.11

 

Boundary Breaches & Escalation‑Discouragement

The investigator:

  • did not confirm escalation
  • revisited their own findings
  • softened their stance
  • reframed their decision
  • delivered the Ombudsman’s decision

This undermines independence.

10.12

Summary

 

These failures show how regulatory processes can replicate harm instead of preventing it. Part 9 documents how the investigator’s conduct departed from Financial Ombudsman Service procedure and safeguarding expectations.

 

These irregularities did not remain administrative — they created emotional harm, undermined trust, and replicated the same safeguarding failures seen at branch level.

 

Part 10 builds on this by examining the trauma caused by the regulatory process itself and situating the Financial Ombudsman’s behaviour within wider systemic patterns already documented across other Ombudsman bodies.

 

Next

Part 10 – Page 2 continued

Regulatory Trauma & Systemic Patterns Across Ombudsman Bodies

continues on the next page.

 

 

 

 

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