The Association of British Insurers has called for the Financial Ombudsman Service to have more account- ability under the new regulatory structure and says the FSA’s oversight of the FOS has been “negligent”.
Speaking at a panel session on the Financial Conduct Authority, held by The Financial Services Forum and Lansons Communications last week, ABI interim assistant director for retail market regulation James King said the FOS needs to be subject to more regulatory scrutiny than is currently the case.
He said: “The ABI has always supported the idea of having an independent, cost-effective dispute resolution service but what has grown within the industry is the sense that increasingly the FOS is becoming another regulator with quite limited scrutiny and accountability for the decisions it makes.”
King argued the Financial Services and Markets Act makes provisions for the FSA to be held to account for its actions through the use of cost-benefit analyses and consul-tation processes but he said there is no equivalent accountability for the FOS.
He added: “The degree to which the FOS has ever been accountable to the FSA is very limited. I would go so far as saying the FSA has been negligent in setting out rules under which the FOS has to operate under but never actually scrutinising whether or not it operates under those rules.
“There needs to be a definition in the legislation that makes the respective roles of the FCA and the FOS clear.”
An FOS spokeswoman says: “The ombudsman is fully accountable in the way we are run and how we spend our money through formal consultations with the industry.”
An FSA spokewoman says the FSA is responsible for overseeing the FOS but would not comment on how effective it has been in supervising the ombudsman activities.