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Categories:Politics,Regulation

'FOS is quasijudicial but does not act like regulator'

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Financial Ombudsman Service chief executive Natalie Ceeney says the FOS is “unashamedly quasi-judicial” but insists it does not act like a regulator.

Giving evidence to the Treasury select committee last week, Ceeney said the body’s role is inherently quasi-judicial.

She said: “We look at individual cases and we decide on the merits of each case who wins. We are unashamedly quasi-judicial.”

She was responding to a question from committee member and MP for Streatham Chuka Umunna concerning Aifa’s accusation that regulatory creep has seen the FOS shift from a dispute resolution service to an organisation that seems to act as both judge and jury.

In September, Aifa director Robert Sinclair said: “Its original purpose was to arbitrate, to reconcile parties to an agreed solution on a fair and reasonable basis.

“Too often in recent times, they appear to act in a quasi-judicial way.”

Ceeney told the TSC: “We were set up 10 years ago as a lower cost and fast alternative to the courts. Our role is inherently quasi-judicial.

“Where I am hearing criticism from the industry is that we act in a regulatory role and there I would be more robust. We are not a regulator.

“However we extrapolate from what we see in cases and sometimes we do have issues that arise from that, which we pass back to the regulator.”

The 2008 Hunt Review into FOS warned the ombudsman to be conscious of instances where it was in danger of becoming a “quasi-regulator or quasi-legislator”.

Baronworth Investment Services director Colin Jackson says: “From experience, I think there is the inclination to rely on previous decisions if they feel it benefits the consumer which, of course, is not the way the judiciary works.

“There is a danger that through inconsistency, the FOS could veer into becoming a law unto themselves.”

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Readers' comments (9)

  • They just make rules up as they go along and not ni the spirit of the FSA as they are different. So the whole industry has 2 regulators with 2 different set of rules. FSA and FOS. No doudt the FSCS will be next to make yet another set of contradictory rules to screw the industry.

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  • IRAT - You really should get out more.

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  • @ Waz

    30 years experinec is getting out and living in the real world. You obviously have no personal experience in actually dealing with these people........unless of course you are one of them trying to protect your useless quango job?

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  • IRAT – I was commenting more on the fact that you were still coming up with your usual rant at 6 o’clock on a Bank Holiday.
    Whatever floats your boat though. If you feel that spouting the same thing on these blogs as regularly as you do actually makes a difference, then you crack on. I’m sure they’re all listening and really taking notice…..

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  • The Star Chamber was an English court of law that sat at the royal Palace of Westminster until 1641.

    Court sessions were held in secret, with no indictments, no right of appeal, no juries, and no witnesses. Evidence was presented in writing. Over time it evolved into a political weapon and became a symbol of the misuse and abuse of power by the English monarchy and courts.

    Sounds rather familiar doesn’t it?

    The FOS is unaccountable and biased to the consumer. It makes regulations without consultation to:

    •Parliament
    •Statute
    •Common Law
    •Case Law - binding and persuasive precedent
    •Natural Justice
    •The European Convention On Human Rights.

    The FOS is not “even” accountable to that other great bastion of natural justice the FSA. These basic tenets of justice are swept aside by FOS regulators in pursuit of the new politically correct religion called “consumerism”, the greater good?

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  • The Magna Carta was issued in 1215 and it has taken 796 years for the UK to renege on this declaration of rights.

    Consider these provisions cited below and ask yourself if the FOS breaches these

    20. For a trivial offence, a free man shall be fined only in proportion to the degree of his offence, and for a serious offence correspondingly, but not so heavily as to deprive him of his livelihood.

    38. In future no official shall place a man on trial upon his own unsupported statement, without producing credible witness to the truth of it.

    39. No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send other to do so, except by the lawful judgement of his equals or by the law of the land.

    40. To no one will we sell, to no one deny or delay right or justice.

    45. We will appoint as justices, constable, sheriffs, or other officials, only men that know the law of the realm and are minded to keep it well.

    Now if I can bring this up to date and quote the views of a QC:

    Opinion of Anthony Speaight QC:

    “There are growing concerns that the pendulum of consumer protection has swung too far in the case of the Financial Ombudsman Service and small independent financial advisers. The FOS appears regularly to be exercising its discretion to adjudicate upon claims against small IFAs up to its maximum theoretical jurisdiction of £100,000 (now £150K). There is rarely an oral hearing. And there are good reasons to believe that sometimes FOS makes substantial awards in cases which would be rejected by the courts. On other occasions compensation seems to be calculated in a more generous manner than a court would assess damages. Some such IFAs are wholly uninsured; others have to bear very large excesses. There is no appeal on the merits.

    Such a system would be tolerable if the maximum award were modest – say £5,000 (which is the maximum summary compensation under the legal professions’ schemes for “inadequate professional service”). It would also be tolerable if, as is the case with the summary system of adjudication in the construction industry under the Housing Grants Construction and Regeneration Act 1996, there could be a complete rehearing before a court. And it might even be tolerable if it were applied only against very large companies
    But an unappealable, compulsory, summary jurisdiction against small traders making awards as great as £100,000 is, in my view, both wrong in principle and producing injustice in practice.”

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  • May I offer a small correction to Simon Mansell's Star Chamber analogy - and thereby strengthen his already compelling argument?

    Like the equally repressive Council of the North, Star Chamber was not a court of Law but a prerogative court. It was not obliged to apply the Common Law, instead enforcing the King's will - arbitary as it frequently was.

    There is a danger that the desire of FOS staff to do justice may lead them into injustice - simply because they apply expediency rather than law.

    I seem to recall the judges swear an oath 'to do justice according to law to all manner of men, without fear or favour, affection or ill-will'. What's good for Her Majesty's judges must surely be good enough for FOS officials!

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  • @Socrates

    Dear Socrates

    Thank you for the correction. I note your namesake was found guilty in part for not believing in the gods of the state (the modern day FSA) and subsequently sentenced to death by drinking hemlock. I trust the FSA powers have not reached that level ... yet!

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  • Ad nauseam

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