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Confusion as FOS oversteps its line

The interaction between the Financial Ombudsman Service and FSA has been blamed for creating confusion on issues like treating customers fairly.

At a fringe meeting at the Labour conference in Manchester last week, Finance & Leasing Association director general Stephen Sklaroff said there was a danger of the FOS becoming a quasi-regulator and confusing firms.

He said: “Ombudsmen in this country were set up as a self-regulatory initiative by the financial services sector in response to some serious problems because it was seen as a quicker, more streamlined way of dealing with customer complaints rather than requiring people to go to the courts.

“The temptation for a new statutory ombudsman service, because it was in effect nationalised by the Financial Services and Markets Act, is to stray into regulatory areas, so that you start getting confusion because companies may feel that they are being told by the ombudsman that there are a certain set of things that they need to do to treat their customers well but it does not seem to be quite the same as what the actual regulator is saying.”

Sklaroff argued that the FSMA did not look in enough detail at how the FOS and FSA fit together and that the confusion between the two bodies needs to be resolved.

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