An ombudsman, or “ombud,” is a neutral party who assists individuals with resolving conflicts between individuals and organizations like governments, universities and colleges, hospitals, news organizations, and corporations. Financially speaking, the Securities and Exchange Commission (SEC), the Consumer Financial Protection Bureau (CFPB), and the Financial Regulatory Industry Authority (FINRA) have ombudsmen that help consumers resolve issues.
Learn more about what ombudsmen do, how they work, and how they compare with other representatives.
Definition and Examples of an Ombudsman
An ombudsman works as an impartial party to resolve conflicts individuals have with various organizations. They’re often employed or appointed by the organization the individual lodges a complaint against, but the ombudsman is not tasked with representing the interests of the organization that hire them.
They’re customer-focused and unique in that they can maintain confidentiality while assisting individuals or groups with the concerns they have. An ombudsman is typically a free service.
- Alternate names: Ombudsperson, ombuds, ombudsperson
Some examples of ombuds include the SEC’s Office of the Ombudsman, the CFPB’s ombudsman, and FINRA’s Office of the Ombudsman
A CFPB ombudsman, for example, will investigate and help to resolve complaints between consumers and the CFPB. The ombudsman’s services are free.
The term “ombudsman” originates from the Swedish language and means, “representative.”
How an Ombudsman Works
The purpose of an ombudsman is to resolve conflicts, often informally. As a neutral party, they don’t take sides and can advocate fairness for all parties involved. An ombud is not a mediator, an attorney, or a human resource representative. Some types of ombuds have the authority to investigate claims, while others act as informal advisors.
The first step an individual can take is to find the ombudsman for the organization they have a complaint against. Not every organization has an ombudsman. They are more common in government entities, such as federal organizations like the CFPB and state-level organizations like the Tennessee Commission on Youth and Children Commission.
Individuals should contact the ombudsman when they feel they cannot resolve an issue directly with the organization, are unsure of what the proper channels are for handling the concern, or if they require anonymity.
There are a number of ways that ombuds can help individuals, and the services the ombud offers can vary by company or organization. The following list is an example of the services offered by FINRA’s ombud:
- Listen to complaints and issues
- Talk with individuals about options for resolving their issues
- Clarify decisions, policies, and practices of the organization
- Supply information and open lines of communication
- Be an alternative channel of communication to management
- Evaluate policies and practices to make sure they're working the way they should
- Point you to helpful resources
- Taking objective action to resolve matters that don’t have established procedures for resolution
- Identify and resolve systemic issues that led to your complaint
A good example of how an ombudsman works is the CFPB’s ombudsman. Consumers can contact the office to resolve issues with the CFPB. The CFPB ombud knows the bureau’s laws, regulations, and policies, and has access to CFPB officials. When you present an issue you’re facing, the ombud can have a discussion with you, help you come up with solutions, share their analysis of your situation, give you an impartial perspective on the matter, and give you recommendations to resolve the issue.
The SEC’s ombudsman functions in a similar way. The office helps retail investors work out their issues with the SEC. The ombudsman representative you work with will listen to your issue, clarify SEC policies and practices, and will offer solutions available in the SEC and outside the SEC.
Types of Ombuds
Classical ombuds deal with complaints or concerns about government policy. They can be elected or appointed and generally have the power to investigate claims and make recommendations for change.
Advocate ombuds operate in both the public and private sectors. They will look at claims impartially but can have the power to advocate on your behalf. It’s common to see advocate ombudsmen in long-term care facilities.
Hybrid ombuds are usually found in public or private organizations. They primarily use informal methods to resolve issues, but may also have the power to investigate claims and publish special reports.
Executive ombuds work in both the public and private sectors. They receive complaints from individuals about organizations. They can work to hold the organization accountable for the issues you bring up, or they may work with officials to improve the weaknesses in the processes, procedures, and programs you’ve identified.
Legislative ombuds work in the legislative branch of government and their goal is to hold agencies accountable to the public. They investigate complaints brought by citizens or government employees about government policy and procedure.
Media ombuds work to promote transparency within their news media organization. They will investigate claims made by citizens about news reporting and make suggestions to help resolve concerns.
Ombudsman vs. Human Resource Professional
The role of an organizational ombudsman may seem similar to that of a human resource professional. Yet, there are some key differences—most notably in neutrality and confidentiality.
|Ombudsman||Human Resource Professional|
|Neutral and impartial party||Not completely neutral as they are part of the management structure|
|Confidential||Cannot extend complete confidentiality|
|Does not advocate for the individual, groups, or the business||Must directly represent and protect the interests of the organization|
|Advocate for fairness and equity||Must directly represent and protect the interests of the organization|
|Identify options for resolution||Identify options for resolution|
|Can suggest modifications to policy||Can make or modify policy|
|Organizational ombudsmen do not conduct formal investigations, though other types of ombudsmen may.||May conduct formal investigations|
- An ombudsman can help you resolve conflicts with an organization or government entity.
- Ombudsmen are neutral, impartial, and don’t take sides.
- Use an ombudsman when you can’t resolve the issue directly with the company or prefer to remain anonymous.
- Key consumer-related departments in the federal government have ombudsmen, including the SEC, CFPB, and FINRA.
- Consulting with an ombudsman is free.
International Ombudsman Association. "What Is an Organizational Ombudsman?" Accessed Dec. 7, 2021.
Financial Industry Regulation Authority. "Ombudsman Frequently Asked Questions." Accessed Dec. 7, 2021.
Consumer Financial Protection Bureau. "CFPB Ombudsman Frequent Asked Questions." Accessed Dec. 7, 2021.
Securities and Exchange Commission. "Ombudsman." Accessed Dec. 7, 2021.