Can you trust the Financial Ombudsman Service (FOS) to resolve your dispute with a bank or insurer? A whistleblower has told Guardian Money that a “disastrous” management reorganisation has left the service in disarray, with the public waiting as long as two years to get justice.

The whistleblower, a senior staff member at the FOS who wishes to remain anonymous, alleges that:

• Consumers sending complex complaints to FOS can wait 10 months before a file is even picked up and examined.

• The waiting time for pension disputes is seven months.

• Wronged consumers can wait up to two years until their claims are finally adjudicated.

• The number of unresolved general claims (non-PPI) that remain unresolved a year after being received now stands at 15,551.

• Managers expected case handlers to resolve 4.5 complaints a week, but the real figure is 1.7.

The FOS has disputed the whistleblower’s claims and says 80% of cases are resolved within six months. It says it runs an “effective and essential service”, while conceding that it has seen a trend towards more complex complaints – such as fraud and scams, and self-invested personal pensions – that often require significant time and resources to resolve.

Documents shown to Money by the whistleblower indicate that a consumer with a complex dispute with their mortgage company or home insurer faces a wait of about 10 months before the file is even picked up and looked for the first time.

The service was set up to help consumers get fair treatment from the banks, insurers, pension and other financial services providers. Staff act as independent adjudicators over disputes, and their findings are binding on the companies concerned. It’s free for consumers to use, but the company concerned must pay £550.

However, the service has been beset with problems in recent years. In 2018, an undercover reporter for Channel 4’s Dispatches found that staff with inadequate training or financial competence were judging cases – sometimes without, it claimed, properly reading case files.

Several staff have since turned whistleblower in a bid to get the Financial Conduct Authority to take action. Their comments chime with complaints to Money from readers who, having been through the arbitration process, claim the service is not fit for purpose.

According to the latest whistleblower, things are even worse now than a year ago. A 2016 reorganisation changed the way cases are distributed, he says. Instead of using expert adjudicators to deal solely with disputes in their specialist areas, new investigators were expected to work across all areas of finance. The result, he says, has been a huge drop in the service’s performance in what it calls its “general cases”, leaving a growing list of people awaiting what can be life-changing sums of money.

Complaints are initially judged by an“investigator” and only escalated to the experienced ombudsmen if either party appeals against the first decision.

The queue of complaints waiting for an ombudsman’s decision has increased dramatically in recent years and now stands at 15,592.

“Previously the adjudicators worked in specialised areas such as mortgages or pensions, [but now] the investigators are expected to be able to handle complaints across most areas, although the board has since acknowledged this was unfeasible and rowed back on this.

“Managers believed their changes would enable investigators to resolve 4.5 complaints a week, which turned out to be a gross misjudgment. The system has never delivered more than 2.6 case closures per week and the current output is now 1.7,” he says.

“The organisation is facing problems beyond simply the backlogs. The resolved complaints per investigator per week is less than half of what it was claimed would be achieved.

And the cost of resolving each complaint now exceeds £1,100 – placing the long-term sustainability of the organisation in doubt.”

The end of the tsunami of PPI claims that swamped the service was set to be an opportunity to start clearing the backlog in complaints. However, improved service times have not emerged, he says.

“This year we intended to resolve 50,000 more complaints than we received – 510,000 versus 460,000 – to deal with the large backlog of cases which had developed, particularly in general casework as a result of the failed restructure. We have just learned that the target has been cut to 310,000.”

The delays are particularly hard on those with buildings insurance complaints, including subsidence and high-value claims that are taking 10 months before anyone starts to look at the complaint.

“The queue for an ombudsman’s decision is, if anything, worse than the queue at the front end of the process. In areas such as buildings insurance and pensions, complainants are now regularly having to wait over a year from the time they request an ombudsman’s decision. Putting the two queues together, it can be seen that if one were to complain today about, for example, a buildings insurance claim for subsidence, it is likely to be over two years before a decision is issued. The complainant just has to hope their house hasn’t fallen down in the meantime,” he says.

A spokeswoman for the FOS said: “Last year an independent review of the Financial Ombudsman Service concluded that we provided an ‘effective and essential service’. We have come off the back of our busiest year for five years and are working to get people answers on their cases as quickly as possible. Our team work hard to make sure every complaint we handle is investigated thoroughly, to ensure we reach a fair result for people and businesses.”