June 2026 Update

Initial Response from Financial Ombudsman 

The Financial Ombudsman Stage

Part 4 — When Safeguarding Fails Twice

Before updating the case, it is helpful to explain how the Financial Ombudsman process operates, as many readers may not be familiar with it.

Understanding the Financial Ombudsman Process

Before continuing with the case study, it is helpful to explain how the Financial Ombudsman Service (FOS) works. Many people believe that when a complaint is referred to the FO, it is immediately reviewed by an Ombudsman. In practice, the process is different, and understanding this structure is important for following the next stage of the case.

The FCA and DISP

The Financial Conduct Authority (FCA) regulates how banks must treat customers, including:

• safeguarding obligations
• handling of vulnerability
• complaint investigation standards
• evidence requirements

DISP (Dispute Resolution: Complaints) is the section of the FCA Handbook that sets out:

• how banks must investigate complaints
• how the Ombudsman must review them
• what evidence must be considered
• fairness and transparency requirements

For example, DISP 3.6.1R requires the Ombudsman to consider all relevant evidence, even if it emerges later.

Investigators vs Ombudsmen

When a complaint reaches the FOS, it is first reviewed by an Investigator, not an Ombudsman.

Investigators:

• gather information
• issue an initial view
• they are not judges
• are not required to have safeguarding expertise
• come from varied professional backgrounds

Their view is not final.

If the customer disagrees, the case can be escalated to an Ombudsman, who:

• is more senior
• conducts an independent review
• may have legal or financial experience
• issues a decision that becomes binding if accepted

This distinction matters for what happened next.

The Investigator ultimately concluded that Halifax had acted fairly and did not uphold the complaint.

Section 6

The complainant’s structured explanation

 of 

Why the Investigator’s view was wrong.

After Halifax issued its Final Response in March 2026, the complaint was referred to the FOS. The expectation was that an independent review would examine:

• the safeguarding failures
• the contradictory internal notes
• the disproportionate questioning
• the emotional impact
• the warnings that access to funds could be denied
• the refusal of privacy

However, the investigation introduced a new safeguarding concern that had not previously been present.

6.1 Lack of Evidence Transparency

The Investigator stated that they had:

• listened to calls
• reviewed branch notes
• considered internal records

Yet the decision did not show:

• what was listened to
• what was read
• how it was weighed
• how it was interpreted

Without transparency, it was impossible to understand how the conclusion was reached.

Fair‑investigation principles require that evidence relied upon is visible, or at minimum, summarised with clarity.

6.2 Misinterpretation of Vulnerability

A significant safeguarding concern arose from the following statement in the Investigator’s decision:

“I note that another adult was with you on one of the visits. So, I can understand why the bank had concerns.”

This reasoning is inconsistent with safeguarding practice across all regulated sectors.

Why this is problematic

• It implies suspicion based solely on the presence of a second adult.
• It treats the presence of a second adult as a risk factor, rather than a cue for additional care.
• It contradicts FCA guidance (FG21/1), which requires firms — and those reviewing their actions — to avoid assumption‑based reasoning and to apply additional sensitivity where vulnerability may be present.
• It introduces a safeguarding failure within the investigation itself.

6.2a — Factual Inaccuracy in the Investigator’s Account

The Investigator’s account also contained a factual inaccuracy that affected the reasoning used to justify the bank’s concerns. In the written decision, the Investigator stated that a second adult was present at one of the bank visits. This was incorrect. The second adult was present at both bank visits.

This matters because the Investigator used the incorrect assumption — that the second adult appeared only once — as part of the rationale for why the bank “had concerns.” When the factual basis is wrong, the justification built upon it cannot stand. The presence of the second adult was consistent across both interactions and therefore cannot reasonably be interpreted as a sudden or suspicious change in circumstances.

This error further illustrates the broader issue identified throughout this case study: the reliance on incomplete or inaccurate reconstructions of events, rather than a clear, evidence‑based assessment of what actually occurred.

6.2b — The Second Adult Had a Legitimate Reason to Be Present

The Investigator’s reasoning also overlooked a key contextual fact: the second adult who accompanied the complainant had a legitimate reason to be present at the bank. Their attendance was not unusual, unexpected, or indicative of risk. They were conducting their own banking business, and their presence formed part of a normal, routine visit.

This context is important because it further undermines the suggestion that the bank’s concerns were triggered by the appearance of an unfamiliar or unexplained individual. The second adult’s presence was entirely appropriate, consistent across both visits, and unrelated to any safeguarding risk. The omission of this information contributed to an inaccurate reconstruction of events and weakened the basis for the Investigator’s conclusions.

This marked a point where safeguarding failed twice: first at branch level, then during regulatory review.

6.3 Procedural Issues: DISP and Evidence Handling

The Investigator declined to consider new information that emerged during the investigation.

This is inconsistent with DISP 3.6.1R, which requires the Ombudsman to consider all relevant evidence, regardless of when it emerges, if it is material to the complaint.

By refusing to consider new information, the investigation did not meet the procedural standard required under DISP.

6.4 Reframing Distress as “Inconvenience”

The decision described the customer’s experience as “inconvenience,” despite:

• public questioning
• warnings of account freezing
• refusal of privacy
• threats of fraud‑team intervention
• contradictory instructions
• emotional impact

Minimising emotional harm is itself a safeguarding concern, particularly where vulnerability may be present.

6.5 Outcome and Escalation

Given the:

• lack of evidence transparency
• misinterpretation of vulnerability
• procedural errors
• safeguarding concerns
• failure to address key issues

…the customer rejected the Investigator’s view and requested escalation to an Ombudsman.

Under DISP rules, an Ombudsman must now conduct a full, independent review.

This escalation is ongoing.

Section 7 — Systemic Lessons from the FOS Stage

The FOS stage reveals wider systemic issues:

a) Safeguarding must not rely on assumptions

     The presence of a second adult is not a risk indicator.

b) Evidence must be visible

     Decisions cannot rely on unseen or unexplained internal notes.

c) Vulnerability must be understood, not misinterpreted

     FG21/1 requires sensitivity, not suspicion.

d) Regulatory processes must not replicate harm

      Safeguarding failures should not be repeated at investigation stage.

e) DISP rules must be applied consistently

     All relevant evidence must be considered, even if it emerges later.

Section 8 — Conclusion: Safeguarding as a System, Not a Single Point

This case now demonstrates safeguarding failures at two levels:

• Branch level — where internal errors, assumptions, and contradictory processes created barriers to lawful access.
• Regulatory level — where vulnerability was misinterpreted, evidence was not shown, and procedural rules were not fully applied.

Safeguarding is only effective when:

• assumptions are avoided
• vulnerability is understood
• evidence is transparent
• processes are proportionate
• emotional impact is recognised
• systems do not replicate harm

Further updates will be added as the Ombudsman review progresses.

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