That had the effect of stopping the ombudsman from issuing a formal decision.

The firm also refused to treat the arbitration as a test case, which would have given the ombudsman power to decide who should bear the legal costs of the arbitration.

Although the firm broke none of the ISO scheme’s rules and did nothing illegal, Stevens believes its actions went against the spirit of the scheme.

“It undermines the integrity of the scheme and we are very concerned about that,” Stevens says.

The ISO is a voluntary industry body set up to resolve disputes between financial services firms and their customers. Complaints are confidential, meaning the company has not been named.

Stevens says there had been several complaints about the firm over a few months.

“When a pattern starts to emerge we treat it with a certain degree of seriousness because it may indicate a systemic problem,” she says.

She says these developments have highlighted a loophole in the scheme's terms of reference.

Because of the procedure used by the ISO when investigating complaints, the firm became aware of what the decision would be, Stevens says.

“The participant was then able to take the complaint away from the office by providing the complainants with notices of arbitration.”

Stevens also criticised the firm’s refusal to treat the arbitration as a test case.

The ISO scheme was free to consumers. Forcing them into arbitration meant they had to pay and was fundamentally wrong, she says.

Stevens says she understood the dispute between the firm and its customers had now been settled.