The FOS seems effective to consumers because it levies a £750 charge to the financial institution for each case it investigates. It is often cheaper to do whatever the customer wants, whether or not the complaint is justified.
The financial institutions at the receiving end of FOS decisions don't necessarily regard it as effective. Claims management companies, for instance, can flood banks with very many dubious claims, with the FOS as effectively the enforcer.
My state (New York) has a similar regulatory feature. I had an issue with bees inside of the utility pole that feeds my home. Issue: the pole is owned by the telephone company. So power people tell me to call the phone company, and the phone company tells me to get a landline before they will talk to me.
So I called the public utility commission, which apparently starts fining both parties within 48 hours of the complaint, which I submitted on Sunday. Monday morning arrives, and there is a comical gathering of trucks with crews frantically working to replace the pole (which is a fascinating process).
The foreman told me that the government is essentially level 3 support, and had I worked through the company, he probably would have inspected it over a few months before any work would have started, and only if I was persistent.
The key lesson is that large companies only perceive pain. PayPal lives in a big loophole, so it’s difficult to inflict pain on them and thus difficult to ever be satisfied with them.
The financial institutions at the receiving end of FOS decisions don't necessarily regard it as effective. Claims management companies, for instance, can flood banks with very many dubious claims, with the FOS as effectively the enforcer.