British Banking Ombudsman Opens His Shop for Business

Article excerpt

LONDON -- The world's first banking ombudsman is open for business here. Since the first of this year, Ian Edwards-Jones has been empowered to mediate disputes between banks and customers and make awards of as much as $75,000 to make amends for lapses in banking services.

His appointment to the new post came with the blessing of Britain's largest retail banks. Currently, 19 banks representing some 33 million customers collectively fund his office, including Mr. Edwards-Jones' own annual salary of roughly $60,000.

Whether this largesse is good public relations or a response to government pressure hardly matters. The fact is that Mr. Edwards-Jones, a 62-year-old lawyer who had been a social security commissioner, will not answer to the banks that pay his way.

Instead, his master is the National Consumer Council, whose study last year, entitled "Bank Services and the Consumer," claimed that 24% of the banking public wanted an impartial judge in consumer banking matters.

"In the first instance I am a conciliator," Mr. Edwards-Jones said in a recent interview. "Stage one will be to assemble information [from a complainant]." If a bank has not gone far enough in addressing a customer's concerns, he will "invite them to reexamine the case."

He is confident that this invitation will be enough to resolve 75% of the complaints. If the effort fails, and the parties cannot reach a settlement, he can make an award binding on the bank.

Idea Borrowed from Insurance Industry

Mr. Edwards-Jones said he does not expect to spend a great deal of time in court: "It will be more of a case-file situation than a pseudotrial situation."

The concept of the ombudsman is copied from the Insurance Ombudsman Bureau, which was established in Britain in 1981 and which by most accounts has done a lot to improve the insurance industry's image by appeasing disgruntled policyholders.

The largest retail banks in Britain, the so-called "High Street banks," will benefit from Mr. Edwards-Jones' role, according to Brian Apse, a spokesman for the Banking Information Service, an industry organization.

"The banks saw the need for an ombudsman about the time of the consumer council study," Mr.Apse said. "Yes, it was a coincidence." He rejected the idea that the banks were pressured to fund an ombudsman. "Nothing is to be gained from dissatisfied customers," he asserted.

Mr. Edwards-Jones suggested that the banks may have gotten motivation elsewhere. If the banks had not joined together to sustain an ombudsman, he said, "the consumer council would have asked government to legislate. …