I am constantly staggered at how this industry tolerates the waywardness and irrationality of the Financial Ombudsman Service.
The mindless drift towards ‘consumer enfranchisement’ continues unabated and is campaigned for relentlessly at Westminster, in the popular press and in a deluge of unbalanced television and radio programmes that purport to champion the downtrodden Clapham omnibus user. Maybe we are worn out by the onslaught.
Now this is the point where some true believer reaches for their pen and accuses me of anti-consumerism. Not true, I am in the business of keeping my clients happy, and some have been with me for more than 30 years. The problem is the official mindset that starts from the premise that if somebody levels a complaint there must be something wrong; smoke and fire, if you will.
Do not get me wrong, consumers have been and are being regularly ripped off and mistreated. This will never stop, it is part of the human condition, and some will inflict bad advice through idiocy or perhaps a propensity to profiteering. But there is a major difference between genuine rip-offs and speculative or hindsight accusations of misselling.
Financial services firms appear to be fair game for any instance where a client is disappointed with investment performance or some other personal determinant of what constitutes ‘good’.
The payment protection insurance affair is a prime example, where consumers have been led to believe the institutions are so inherently venal they are fair game for misclaiming. How many billions of unwarranted compensation have been paid out to consumers who knew what they were buying and may even have claimed on the plans?
The FOS parades itself as balanced and fair and points to the low level of complaints against advisers.
When it suits, the FOS likes to equate itself with the court system – and the chief ombudsman’s salary is equivalent to that of a High Court judge, although the similarity ends there. Previous adverts for the position have stated that legal experience is not considered necessary. Quite.
Can you imagine the outcry if on arriving at court the judge turned out to be a trainee butcher who fancied a change of career and the opposing solicitors’ CVs boasted of clerical experience at a bank? This would not be tolerated and nor would it gain approval if the appeal process was heard by friends and colleagues of the original judge and legal advisers.
There are many things wrong at the FOS: unqualified adjudicators, lack of an independent appeals process, a refusal to allow oral hearings, deflection of lawful rejections. However, the main problems are arbitrary adjudications and final decisions that, despite the automatic rebuttals, seem slanted towards believing the complainant.
When the FOS receives these accusations it responds with all the sincerity of a wounded weasel, telling us the regulator drew up the rules and it only follows them.
It is, of course, politically convenient to have some mechanism that satisfies consumers and their salaried advocates. Having such a mechanism is the important thing, ensuring that it is balanced and fair and follows the law appears to be of secondary importance.
Alan Lakey is partner at Highclere Financial Services