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Advisers split as appeal deal is turned down

The FSA and the Financial Ombudsman Service have ruled out setting up an independent appeals tribunal to allow IFAs to challenge ombudsman decisions, which some advisers argue breaches their human rights.

The decision comes as part of the FSA’s and FOS’s consultation on how to make the FSA and ombudsman work more effectively on cases with wider regulatory implications.

The decision has split IFA organisations. Campaign group the IFA Defence Union says the FSA and FOS’s original consultation paper admits that even one decision could put an IFA out business.

The main IFA trade body Aifa says that allowing appeals would place huge extra costs on IFAs as consumers appeal over decisions which do not go in their favour.

The FOS and FSA say they based the decision on feedback from firms and consumer bodies to last year’s consultation paper, CP04/12 with 60 per cent of respondents against the move, mostly from consumer groups and bigger firms.

But IFA Defence Union chief Evan Owen highlights a clause in CP04/12 which states: “For some firms, particularly small firms, a single adverse decision from FOS might have an impact on livelihood and cost of indemnity insurance.” Owen says: “This alone should be sufficient cause for a method of challenging an FOS decision to be available to a firm.” He accuses the FSA and FOS of “totally ignoring the submissions of the small IFAs”.

But Aifa director of policy Fay Goddard supports the decision by the regulator and says an external appeal system would bring big costs upon a sector that has a good complaints’ record and could pave the way for an influx of complaints from consumers.

The FSA and FOS have produced a set of more transparent procedures for handling complaints which could have wider regulatory implications for businesses and consumers.

The changes are designed to make the complaint process more straightforward. Consumers and IFAs can now refer complaints directly to nominated individuals at the FSA – Paul Kennedy (wider. implications@fsa. gov. UK) and the ombudsman – David Thomas (wider.implications@financial-ombudsman.org.uk). The procedures also clarify when the FSA will intervene in a case.

FOS spokeswoman Emma Parker says the measures will improve relations with IFAs. She says: “Any transparency increases trust as people can see more clearly what is going on. These measures will make it clearer what the process is, how people can feed into it, and give results as far as it is possible.”

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