Key Points
Complaints Process
General Powers

In February 2002 the Advisory and Finance Committee of the States of Guernsey published a consultation document proposing a new ombudsman scheme to cover complaints within the financial services sector. The consultation period is now over and a Financial Services Ombudsman Development Committee is in the process of being selected.

The scheme will not have the power to regulate, only to compensate. It is proposed to be similar to the UK ombudsman scheme.

The scheme is intended to deal with consumers who feel that they have been misrepresented or misled by a financial services company. Its ultimate aim is to make transactions and dealings more transparent, and to protect the public against financial loss due to dishonesty, incompetence or malpractice by persons carrying on financial business.

Key Points

The consultation document sets out the proposals of the States of Guernsey Advisory and Finance Committee. Its key points are as follows:

  • The financial services ombudsman scheme is to cover all business regulated by the island's financial regulators, the Guernsey Financial Services Commission, and also some businesses which are not currently so regulated (as listed in the document).

  • The scheme is to be operated by a specially constituted body corporate. Its board will comprise up to 13 members drawn mainly from individuals with appropriate financial services experience, with three members from a non-financial background.

  • A chief executive, the chief ombudsman, will be appointed with the primary responsibility of determining individual complaints.

  • The establishment, functions and operations of the scheme administrator will be defined by legislation.

  • The costs of the scheme administrator should be funded by the financial institutions and individuals who are the subject of complaints, the taxpayer, or a combination of the two.

  • The scheme will cover the Bailiwick of Guernsey.

  • The scheme will be structured to accommodate complaints relating to consumer credit (although there is no specific legislation in Guernsey which governs consumer credit, legislation may be enacted at some time in the future).

Complaints Process

With respect to complaints, the document provides as follows:

  • The complainant will not have access to the chief ombudsman until the complaints procedure of the organization concerned has been exhausted. Although not all financial institutions are required by law to have complaints procedures in place, the Guernsey Financial Services Commission expects such procedures to be in place.

  • The scheme will only attempt to resolve complaints where the compensation sought does not exceed £100,000. Disputes for amounts above this would be better settled in the courts.

  • The chief ombudsman will have the power to request relevant information from the institution and, if necessary, may apply to the court to make an order for the production of the information.

  • The chief ombudsman shall only review complaints that are eligible. It is the prerogative of the chief ombudsman to decide on the facts whether a complaint is eligible. Examples of ineligible complaints would include complaints that are frivolous or vexatious, or complaints where fair compensation has already been offered. Further examples are listed in the document.

  • The process for dealing with a valid complaint will be established so as to comply with Article 6 of the European Convention on Human Rights.

  • The parties are not bound by the decision of the chief ombudsman and any party dissatisfied with the decision may seek redress in the courts.


The document states that in addition to the compensation awarded, the chief ombudsman may require the institution to pay up to £5,000 for distress and inconvenience to the complainant.

If an institution does not make payment of the award within the allotted timeframe, the chief ombudsman may make a public statement stating this to be the case, thus enabling the complainant to seek a court order or for non-monetary redress, an injunction.

General Powers

The committee expects that the new law to establish the scheme administrator will amend the Data Protection (Bailiwick of Guernsey) Law 2001, to the extent that the scheme administrator will not be required to submit personal data to individuals on the basis that the provision of information may prejudice the scheme administrator's consideration of a complaint.

It is further proposed that:

  • the chief ombudsman should be able to recommend changes in financial services regulation, policy and legislation to the relevant committees of the States of Guernsey or other bodies, including the Guernsey Financial Services Commission;

  • the scheme administrator should not provide advice about institutions or the services they provide;

  • the chief ombudsman will seek to join the British and Irish Ombudsman Association; and

  • the new law will take into account European Commission Recommendation 98/257/EC on bodies responsible for the out-of-court settlement of consumer disputes.


The Advisory and Finance Committee aims to prepare a policy letter to be presented to the States of Deliberation - Guernsey's legislative chamber - towards the end of 2002. If the policy letter is approved, the committee hopes that the law establishing the scheme will be registered in 2003.

It is expected that the members of the Financial Services Ombudsman Development Committee will become the scheme administrator's first members.

For further information on this topic please contact Ian Kirk or Paul Nettleship at Collas Day by telephone (+44 1481 723191) or by fax (+44 1481 724074) or by email ([email protected] or [email protected]).