From two islands with fewer than 200,000 people, trillions of pounds are managed in global trust and pension structures. It’s a paradox: one of the world’s smallest jurisdictions sits at the centre of some of the world’s most complex financial disputes.
And those disputes reflect how dramatically banking has changed over time. What was once a conversation with a familiar face behind the counter has become a digital interaction mediated by systems, apps, and security protocols – making financial services more efficient but also exposing consumers to new risks. Fraud, scams, and cyber-enabled deception are growing at pace, leaving institutions and regulators grappling with where responsibility lies.
As the inaugural Principal Ombudsman and Chief Executive of the Channel Islands Financial Ombudsman (CIFO), Douglas Melville has been at the centre of these changes for the past decade.
Before moving to Jersey in 2015, he helped to design and launch chip-and-PIN technology in Canada, later becoming a leading voice in international financial dispute resolution. He has advised the OECD and the World Bank, chaired the International Network of Financial Services Ombudsman Schemes, and served as Canada’s Ombudsman for Banking Services and Investments.
As CIFO marks its 10th anniversary, he sat down with Express to share his reflections on a decade as a “canary in the coalmine”…
Q: You’ve had a long career in ombudsman roles internationally. What brought you to Jersey and how has the experience compared?
Douglas Melville: The interesting thing about roles like this is they tend to be the role you do at the end of your career. So it was a little early for me when I was doing it in Canada. I wasn’t done yet. I had four kids headed to university. I was definitely not done. Economics certainly mitigated against calling it a career. At the end of the role in Canada, I fell into ombudsman practice by accident, which was one of the most wonderful accidents anyone could hope for.
The opportunity to come to Jersey and do it for the Channel Islands was a reset opportunity that has carried me from that point in my career to where now I am approaching the end. I’ve just started my third and what will be my final five years. My job now is to not only have these five years go well, but at the end of the five years be in a position to pass the baton with all that that entails.
Q: How does your industry background help – or hinder – when sitting as an ombudsman?
Douglas Melville: It cuts both ways. One of the big challenges for people coming in from industry is there’s a bit of deprogramming required. Because you’re an insider, you think you know how things should work, but when they don’t work, does that mean you know where to look? Absolutely. But does it also mean that you have an industry perspective on the customer and consumer complaints? That can also be true.
Luckily, my career in financial services had been largely in head office staff and operational roles where these were types of issues I got to deal with. I wasn’t in frontline banking for most of my career. I had a responsibility for payments for a large bank in Canada, and most of the complaints you deal with touch on payments directly or indirectly, certainly fraud and scams. For most of us, the day-to-day is about payments.
Q: What themes dominate the complaints you’re seeing today?
Douglas Melville: Post-covid, everyone in my line of work worldwide is dealing with an explosion of fraud complaints. Depending on how you measure it, over a two-year period, we saw a 195% increase in fraud complaints. But actually, if you were more selective about the timeframe, you could calculate it at over 1,000%.
The bad guys have figured out how to make money, so they’re going to plough their capability into it. The question is, are we getting smarter? We’re bombarded with information online. It used to be the scams would come with my bank’s logo but the colour was wrong and the language was awful. Those obvious signs are gone. Now the logo is perfect, the font is right, the English is clean – and you believe.
Q: How do you judge fairness in such complex disputes?
Douglas Melville: Most of the problems we see boil down to human error in communication or administration. Technology removes some of that, but the weak link is us. When both customers and banks are victims of fraud, our real challenge is what’s a fair and reasonable apportionment of responsibility.
Our law requires us to apply a fairness test, which is not always the same as what the law says. That assumes there are laws or regulations in place, which here you might be surprised to know there aren’t necessarily. Since the customer and the firm are both victims, the apportionment for us largely flows from the conduct of the customer and whether they have been grossly negligent. Short of that, we tend to see the scales tip towards the customer.
…One of my favourite all-time cases was from Canada. A man in his late 70s, synchronised all his bank cards to the same PIN: 1234. After a night of heavy drinking and meeting a ‘professional’, his wallet was stolen and his accounts were emptied. Initially, we thought he was the agent of his own destruction. But as we dug deeper, we found layers of vulnerability, cultural issues, and family dynamics… It raised fundamental questions about fairness, responsibility, and how institutions treat vulnerable individuals. It ended up as a case study in public policy as much as in consumer protection.
Q: Are banks becoming more risk-averse, and what does that mean for customers?
Douglas Melville: I don’t think it’s fraud-related risk appetite, it’s broader: sanctions, money laundering, terrorist financing, money valuation. That’s driving up the cost of compliance. Customers may find themselves exited from relationships where institutions no longer see economic viability…
We don’t tell banks who they must do business with. That’s their decision. But we hold them accountable for the process. If you’re going to ask a customer to leave, you can’t just tell them on Tuesday that you’re done. If there’s advanced notice and fair process, that’s reasonable. When there are no alternatives left in the market, that’s a matter for government and regulators.
Q: The Channel Islands are small in population but large in financial footprint. How does that shape your work?
Douglas Melville: The size of the market here I often liken to Canada’s in many ways. If you factor in what’s in trust structures, it’s trillions. It’s a massive financial market managed from two islands with a combined population under 200,000.
We have a staff of 10 and seven ombudsman contractors from the UK. If we have 400 in-mandate cases a year, that’s busy for us. Three-quarters of complaints are from outside the Channel Islands, which makes this a global role. I’ve had calls with UN staff in Bangladesh on pension issues…
The complexity of pensions and trusts here is unlike anywhere else I’ve worked. I joke with people and go, ‘you can’t blow your nose in Jersey without picking up a trust document!’… Pensions are being delivered through layers of trust structures. I find that inherently legally complex and interesting, but it also adds cost and complexity and compliance.
Q: What systemic issues have you flagged to regulators and policymakers?
Douglas Melville: When I first arrived, unsuitable investment advice was a hot area. The regulator prioritised it and acted. That showed the value of our feedback. More recently, informal lending and high-cost credit practices have been flagged. In Guernsey, lending and credit regulation came in two years ago; Jersey is following.
Motor finance is another emerging issue. In the UK, discretionary commission arrangements were banned in 2021. We’re starting to see early signs that similar practices may have taken place here. Car dealers arranging financing could earn commissions based on higher interest rates – sometimes eye-wateringly high. We’ve had cases suggesting that happened in this jurisdiction too.
We’ve also raised concerns around transaction blocking and account closures, which have increased as institutions consolidate risk appetite. Customers are often bewildered when long-standing relationships are suddenly ended. Our role isn’t to overturn those commercial decisions, but to highlight to regulators where systemic patterns suggest a gap in consumer protection.
Fraud and scams remain a constant theme. While we resolve cases individually, the patterns we see help regulators and government understand where public education, better disclosure, or even legislative intervention may be needed. Complaints are a fabulous canary in the coal mine. They point to friction in the marketplace that, if addressed early, prevents greater harm down the road.
Another example is credit disclosure. Poor interest rate transparency has been a recurring issue, particularly in lending. Regulators have acted in other jurisdictions, and we’ve flagged the need for clearer disclosure standards here. These systemic themes feed into the policy ecosystem: we’re a small part of it, but our casework provides tangible evidence of where change is needed.
Q: Beyond complaints, what broader challenges do you see for the sector?
Douglas Melville: Complaint management companies are promoting weak or non-existent complaints for a cut, just as they did during the PPI scandal in the UK. We’re also dealing with weak internal complaint handling by some firms.
Then there’s the war for talent. Inflation and cost-of-living pressures are real, particularly in small jurisdictions. Maintaining competitiveness requires prioritising productivity and efficiency…
We’re currently experimenting with AI and automation in our office to increase the efficiency of the more administrative-type tasks that are inherent in our process, and things like inbox summarisation.
The next piece for us is the ability to process large amounts of data – so sometimes we get cases involving massive amounts of information provided to us in a non-curated fashion. AI could be helpful in spotting the kinds of themes our team has become very good at – but it takes time. It’s raw horsepower, time and intellect.
We have the luxury of watching what our friends and colleagues around the world are doing – the Ombudsman Association in the UK is very collaborative.
Q: How is technology – particularly AI – challenging both financial services and your own office?
Douglas Melville: AI-enabled technology is hugely powerful – and so is the technology used by the bad guys. The weak link in all of this is us. It used to be me talking with Terry behind the counter at my local bank branch in Montreal; now it’s me talking to a system – logging in online, authenticating on my phone with facial recognition or a thumbprint, and initiating transactions. What if those transactions are being manipulated by scams or fraud? The dynamic between people and their financial services providers has changed.
Firms have strong protocols to verify who we are, but when someone calls claiming to be the bank, how do we know who they are? That reciprocity isn’t there. And on the other side, you’ve got world-class social engineering – ex-KGB or FSB-level skills – being turned on us as consumers to create panic, urgency, and confusion. A text saying your account will be frozen unless you act now, a voice that sounds exactly like a family member needing money – with AI, those tactics are ever more convincing. It compromises the very security protocols designed to keep our money safe.
At the same time, the question for the industry is: if the customer is the weakest link, who pays when things go wrong? That’s a global debate, and we’re right in the middle of it.
Q: It sounds like all jurisdictions and their banking institutions have a mountain to climb to catch up with these evolving threats – are you confident they are doing enough? What will motivate them to act faster to adapt?
As an example, if you look at our cards now, they’ve got these fancy little chippy things. In a former job, I was responsible for that technology. This cost a fortune to roll out, because it’s not just the cards, it’s the banking machines, it’s the payment devices, it’s the technology and the computers – all part of a global system.
When that happens at the level of country, it just shifts the fraud until the whole globe catches up.
So, at what point do you have a business case? You have a business case when the fraud on ‘this magnetic stripe’ is so large that now it’s cheaper to actually spend on the technology and shift over and have the fraud migrate to somewhere else – like the United States, which held on to mag stripe longer than most because it had 11,000 banks, and to coordinate a market with 11,000 banks is a lot harder than to get the seven major Canadian banks around the table.
Q: Looking ahead, what do you see as CIFO’s role in the next decade?
Douglas Melville: We’re the canary in the coal mine. Individual complaint resolution is important, but the real value is the feedback loop that helps industry improve products and services, helps regulators prioritise, and helps government shape policy.
Over the last 10 years, this small office has started conversations that have made a difference. Nothing gets you out of bed more than doing something interesting, never boring, and knowing it makes a difference. My role now is to finish strong and pass the baton in a way that leaves the organisation ready for the next decade.
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This article first appeared in Connect magazine, which you can read in full below…