The Financial Ombudsman Service, which mediates disputes between consumers and companies, has promised to overhaul its operations after an independent report criticised long delays and urged it to improve outcomes for consumers. 

Those making a complaint about a financial firm have been left waiting years for justice, the report by Oaklin Consulting found. It found 1,800 unresolved cases were more than three years old, with some extending beyond the four year mark. In addition there were 13,000 cases between one and two years old and 3,100 cases between two and three years. 

The report said such delays were “obviously detrimental” to consumers, particularly where consumers are financially vulnerable. In some instances complainants had missed the opportunity to progress a case via the courts because of ombudsman delays.

The report said cases took on average five months to be allocated an investigator and the average case took over 14 months to be resolved. The Fos is supposed to resolve complaints within three months.

On top of the long backlog, the arbiter has become less efficient. In 2015, it cost £64m to resolve 119,400 cases, or £535 per case. But last year it cost £111m to resolve 139,800 cases, or £795 per case. The independent report said the Fos needed a 36pc gain in productivity to improve its service.

The backlog, with more than 100,000 outstanding cases, has also damaged morale at the Fos, the report found. 

“An adverse effect on staff morale was widely reported, in particular when taking calls from concerned consumers frustrated at the lack of progress with their complaints,” it said. 

“This has knock on effects for staff; workshop attendees highlighted implications for the quality of work and staff attrition at investigator level.”3

Gary Rycroft, of law firm Joseph A Jones & Co, said the report showed that the Fos was not fit for purpose.

“The Fos is meant to be an alternative to the court system, but the long resolution times means that some people are forced into using the court system to get a resolution, while others are trapped so long that their ‘limitation period’ of six years to take a case to court expires,” he said. 

“Going down the Fos route means that other options are taken away. There is also the immense stress and worry of waiting for a resolution.”