Ombudsman schemes are a controversial subject in the insurance sector. In the UK, the Financial Ombudsman Service, which covers insurance, has overseen a compensation scheme on Payment Protection Insurance (PPI) which has seen £20b handed back to some of the millions of people mis-sold this product. 

Less than good grace

Some of the insurers have co-operated with the scheme with less than good grace. They have not followed, for instance, all the instructions for calculating compensation that the Financial Ombudsman has outlined - and they are giving smaller sums of compensation to their customers. The Ombudsman scheme also passes on information to the insurance regulator, the Financial Conduct Authority, about the sector and individual companies - so insurance companies are marking themselves out as errant players if they lock horns with the Ombudsman.

UK start

The UK was the first country to set up a private sector insurance scheme - the Insurance Ombudsman Bureau, as it was then called, back in 1981. This turns out to have been a historic moment - as that structure became the model for dozens of other private sector schemes around the world. Some of its main rules - being independent and impartial, free to consumers and giving two tiers of decision-making - have formed into the most common template for other schemes around the globe. 

South Africa

A mis-selling problem that happens in one country will very often happen in another - so Ombudsmen are wise to keep in contact with each other and swap information. The UK’s PPI scandal is not the only one: South Africa has also had problems with the mis-selling of insurance to cover credit. 

Ombudsman networks

The Ombudsman keep in contact through organisations such as the INFO Network and FIN-NET which covers the European Economic Area (EEA) and has 57 members in 25 EEA countries. Other EU member states which have insurance ombudsmen include Belgium (Insurance Ombudsman), Denmark (Insurance Complaints Board), Germany (Ombudsman Private Health and Long-term Care Insurance and the Insurance Ombudsman), Estonia (Consumer Complaints Board), Ireland (Financial Services Ombudsman’s Bureau), Spain (Complaints Service of the Directorate-General of Insurance and Pension Funds), France (Insurance Mediator), Croatia (Mediation Centre of the Croatian Insurance Bureau), Italy (ISVAP – Supervisory body for private insurance), Lithuania (State Consumer Rights Protection Authority), Luxembourg (Insurance Mediator), Hungary (Financial Arbitration Board), Malta (the Consumer Complaints Manager at the Malta Financial Services Authority), Netherlands (Kifid), Poland (Insurance Ombudsman), Portugal (Lisbon Arbitration Centre for Consumer Conflicts), Finland (Consumer Disputes Board) and Sweden (National Board for Consumer Complaints).