View the article online at http://citywire.co.uk/money/article/a495461
Identity theft victims left in black hole
If a fraudster takes out a loan in your name you cannot complain to the Financial Ombudsman Service (FOS). Worse still, the lender can chase you for payments, we can reveal.
If a fraudster takes out a loan or credit card in your name, you can not complain or seek redress from the Financial Ombudsman Service (FOS) and the firm can continue to chase you for outstanding payments, the Financial Services Authority (FSA) today revealed.
In order to make a complaint to the ombudsman you must be ‘a customer’ or ‘potential customer’ of a firm. If you are the victim of identity theft however you may technically be neither. The FOS is therefore unable to deal with any complaints from people who feel they been unfairly treated by the firm in question.
Yet, according to the ombudsman, consumers often complain that firms continue to wrongly hold a person liable for a loan, even after it has become clear they were the victim of identity theft or mistaken identity.
The rule in action
In a recent court case – Goff v FOS – Mr Justice Langstaff upheld the FOS’ refusal to deal with a complaint related to identity theft on the basis that the victim was not an eligible complainant.
The claimant said she had been the victim of a number of identity thefts which exposed her to claims that she owed considerable amounts of money to a number of different firms – one of which was a £10,000 credit card debt with MBNA.
She sought redress from the ombudsman because she was worried about two things: that she would be chased by debt collection agencies for debts she did not owe; and that her credit rating would be ruined because it looked as though she was refusing to repay money she owed. The ombudsman, however, refused to handle her complaint because she was not a customer of MBNA.
Mr Justice Langstaff said: ‘It seems to me, therefore, obvious that the rules cannot be construed to make the claimant, whatever the justice of her case may be, fit within the definition of eligible complainant'.
A spokesperson for MBNA said: 'If any of our customers are the innocent victims of fraud then they will not be held liable for any losses on their account. However, in this case, we believe that the card had not been fraudulently applied for'.
There is a small exception, according to the FSA. If the firm uses a debt collector, covered by the Consumer Credit Act, to reclaim the money owed under a regulated consumer credit agreement you can complain to the FOS about the actions of the debt collector.
But this does not offer any protection to people being chased by an FSA regulated firm – only Office of Fair Trading (OFT) regulated firms.
What’s more, the FSA said, if the debt collector is attempting to recover payments under a ‘regulated mortgage contract’, you can not complain because they are not covered under ‘regulated consumer credit agreements’.
More investigation needed
Mr Justice Langstaff observed that the ombudsman seemed uncertain as to its authority in this area.
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