Aifa has voiced concerns that the Financial Ombudsman Service’s plans to name and shame financial firms when publishing ombudsman decisions could make them a target for claim management firms.
The draft Financial Services Bill, published in June, sets out the Government’s intention to require the FOS to publish final decisions.The bill does not specify whether or not the identities of the firms involved should be disclosed.
Last week, the FOS launched a consultation on the requirement, which includes its plans to name firms when publishing the decisions.
The paper says: “The draft legislation is silent on the question of whether the identities of financial businesses should be disclosed. Our initial view is that we should not delete the name of the financial businesses involved – nor seek to avoid publication of information that would identify the business involved.
“In many cases, the identity of the financial business is central to the issue in question and its identity is often clear from the substance of the decision itself.”
Aifa policy director Andrew Strange says publishing firms’ names could see them targeted by claim-chasers.
He says: “We have concerns that claims management firms would become more involved in financial disputes if the FOS publishes the name of firms in its decisions.
“Claim management firms already get partial visibility of cases at the moment, so if they get greater visibility here then we could see more claim management firms trying to capitalise on the industry, which is not in the long-term interests of the consumer.”
The FOS says it does not plan to publish adjudicator views.
It estimates that the cost of publishing ombudsman decisions under the current proposals is unlikely to exceed £600,000 in the first year and £200,000 every year after that.
The consultation is open to responses until December 9.
PMI Independent Financial Advisers director John Stewart says: “I think the FOS is taking things a bit too far by naming firms. Everyone makes mistakes, it is a fact of life. It is wrong for a firm that has made an innocent mistake to be named and shamed. Clearly people who have intentionally misled a client should be named but there should be degrees of guilt and that degree should dictate if a firm is named by the FOS.”
Bloomsbury Financial Planning partner Jason Butler says: “The problem is that the FOS’s only remit is to support the consumer. A lot of the time it upholds a complaint that probably should not be upheld, so if it is going to publish full ombudsman decisions then it needs to improve its decision-making processes.”