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FOS spends £5.3m on consultancies

FOS-Exchange-Tower-building-2015

The Financial Ombudsman Service spent more than £5m on business consultancies to provide expertise to the organisation last year, a Freedom of Information Act request shows.

The complaints adjudicator used a total of 38 consultancies in the 2015/16 financial year. The highest paid received nearly £3m.

The FOS also employed three individual consultants at a cost of £20,237, of which the highest paid earned £15,407.

The FOS did not disclose the names of the consultancy firms or individual consultants.

The FOS has budgeted slightly less for consultants next year however, the FOIA request shows, at £5.1m compared with the £5.4m that was spent in 2015/16.

A FOS spokeswoman says: “Careful use of consultancy support has helped us make good headway with the efficiencies we’d planned across our wider operations.

“We’re currently consulting on our plans and budget for the next financial year taking into account the ongoing uncertainties about our case load. Bearing this in mind, we continue to try to reduce our support costs, find smarter ways of working and get better deals with our suppliers.”

Earlier this week, the FOS proposed increasing its overall budget for next year by £30m to £295m, up from £265m this year.

Contractor staff costs, which were budgeted at £40m for 2016/17, are set to rise to £70m in 2017/18.

The use of consultants is common in financial services regulation.

The FCA, for example, has also spent more than £1.2 million on projects run by a consultancy firm where former boss Hector Sants is a partner, according to another FOIA request.

The Treasury also spent over £400,000 on contracts awarded to firms for consultation on how to promote new Government backed guidance service Pension Wise before it launched.

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. Nicholas Pleasure 16th December 2016 at 10:58 am

    Other peoples money is so very easy to spend.

  2. OMG, how badly we need to review the whole regulatory system!

    The advisers who have to pay for this aren’t even consulted and are ignored when they stand up to say something. So, you won’t listen to us but you will spend our money employing people whose views you do respect? As you are so detached from the industry to claim to represent, perhaps you’re just not the right people for the job…

  3. Ok so let me get this right. The Treasury who looks after the whole country’s finances spends over £400,000 on consultants/consultancies.
    The FCA that looks after the conduct of the entire Financial Services (Industry).
    The FOS that deals solely with complaints, spends £5 million? I only have one question… WTF?????

  4. Neil F Liversidge 16th December 2016 at 12:14 pm

    Obviously they didn’t read my article in Money Marketing from this time last year – https://www.moneymarketing.co.uk/issues/10-december-2015/neil-liversidge-why-i-never-trust-management-consultants/

  5. £5,000,000 on consultants .

    Could some one kindly tell me 8 executive with a salary range from £118,507 to £200,000 do
    If I paid that sort of money I would expect them to make the decisions
    I

  6. Apart from the initial and obvious outrage, this just goes to show the lack of internal knowledge and mindset if they are so reliant on outside help, and from the very people who judge and make rulings on industry complaint cases, there is a clear need for government to be very worried about this.
    I wonder if the NHS, would employ me as a heart surgeon, then pay for consultants to do my work for me, because I can’t do the job

    Also is it right that Sants should be making money out of this as well there has to be a clear bias to use his companies services this in itself neither sounds fit or proper

  7. John Rawicz-Szczerbo 16th December 2016 at 3:50 pm

    So they spend £5.3 million of other people’s monies to have Wayman pronounce at Parliament the FOS will find against advisers ‘whatever the circumstances’ for 100% of losses on an un-insured fraudulent investment by three other regulated firms. Capita, Buegate and Tiuta, in the case of the Connaught Income Fund.
    And all this whistle blown to the FCA by the chief exec of the bank. The FCA basically did nothing other than lie about what they knew and cover up the truth. The FOS are obviously complicit in attempting to save the blushes of the FCA.
    This is an organisation which is completely out of control and simply not fit for purpose. Ms Wayman should be ashamed of herself for perpetrating falsehoods.

  8. If FOS actually had any intelligent, well trained and insightful staff, they would all go and work for these consultancies. Which is what I am assuming these staff have done – because there aren’t any left at FOS!

  9. And just why is the FOS’s case load so massive in the first place? Did any of these consultants identify that one?

  10. Hey! I’m a consultant. Can I have a piece of this cake? I’ll give you a discount and Green Shield stamps as well!

  11. “The use of consultants is common in financial services regulation.” Yes ~ but surely just a few of the crunch questions have to be:-

    1. Who decides whether or not these consultations are actually necessary, worth what they’ve cost or, in advance, whether or not they’re likely to be?

    2. Are any sort of Cost:Benefits Analyses undertaken or approval sought from an independent body?

    3. Are these consultations ever put out to competitive tender?

    4. Unless the FOS can demonstrate efficiency savings of at least 50% more than the £5m of OPM that it’s spent on outside consultants, where is the justification?

    I rather suspect that the directors of any consultancy firm in receipt of an invitation from the FOS to provide yet another thesis probably rub their hands with glee because neither their fees or the contents of said thesis are highly unlikely ever to be challenged. It all seems to be just another part of the regulators’ gravy train.

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