Aifa is to lobby for a comprehensive review of the role and accountability of the Financial Ombudsman Service.
The FSA published a consultation paper on complaints handling today in order to drive up industry standards. The regulator also proposed raising the limit on awards by the FOS from £100,000 to £150,000.
Aifa director Robert Sinclair (pictured) says clearly the proposal to increase the awards limit is not good news for firms, but says advisers should bear in mind that the impact will be greater for other parts of the industry as IFAs make up less than 2 per cent of claims.
But he says: “This consultation does raise questions about the overall operation of the ombudsman. With the current changes to the regulatory architecture there should also be a complete review of the FOS’ role and accountability.”
Sinclair says the trade body will push for the review as part of its response to the Treasury consultation paper on the future of regulation.
He adds: “There has been a regulatory creep where the FOS has shifted from a dispute resolution service to an organisation that seems to act as both judge and jury.
“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. This is not a positive development for either consumers or the industry.”