John McEnroe’s infamous outburst, “You cannot be serious”, screamed in my head as I read the Money Marketing interview with Financial Ombudsman Service deputy chief executive Tony Boorman (See Money Marketing, 3 July).
Boorman is condemned out of his own mouth. It should not be acceptable that UK consumers are prevented from receiving the advice they need at a price they can afford simply to perpetuate a Government quango. His mindset is clearly stuck in the 1980s.
Boorman is no newcomer to the FOS. He was principal ombudsman and decisions director from 2000 to 2012 and chief ombudsman and deputy chief executive subsequent to that. Of course he is not going to see the problem with its work, he has been the person taking the decisions that have led to the industry’s complete lack of faith in the service.
The FCA’s own research, announced two weeks ago as part of its thematic review on the subject, identifies that advice firms believe the current position of the FOS has, and continues to be, a major constraint on the availability of simplified advice. For the chief executive of such an organisation to say he does not understand the problem simply cannot be acceptable.
At a time when positive moves are being taken to cement the position of the UK as a global leader in digital financial advice, reform of the FOS must be seen as in the national interests, not only to maximise the opportunity to make this a major export commodity but also because the British people should have a right to affordable financial advice. This is something that will simply not happen if the status quo at the FOS is allowed to continue.
Recent research by Accenture identified that London and New York are jockeying for position as the world leader in financial technology innovation. It identified that, together, the UK and Ireland have seen the volume of fin tech deals triple since 2011. Over a five-year period, the deal level in the two countries is three times the global average and five times that of Silicon Valley.
Accenture identifies, however, that while London has an impressive track record for first-stage fin tech deals, it loses out in second, third and fourth-stage funding, with many successful London start-ups being acquired by US businesses which have successfully conducted an IPO. This represents a major risk of lost talent and lost revenue to the UK and the Treasury.
With Project Innovate, its thematic review of simplified advice, its recent price comparison website review and other recent papers, the FCA is undertaking a wide range of analysis in preparation for digital advice. The Accenture report identifies that “with support, fin tech could fuel London’s economic future”. I am increasingly hearing the view that of the four major global centres in wealth management, Hong Kong, Switzerland, London and New York, the UK has the most robust personal finance regulation regime.
There is an increasing recognition among senior management within global financial institutions that if you can build solutions to meet the UK regulatory standards, they can be rolled out anywhere on the planet. This makes sense. There are clear benefits in regulators sharing thinking around the world as it will help avoid regulatory arbitrage.
The UK has the majority of the components necessary to build a global leadership position in the delivery of digital advice. We have a thriving fin tech centre and a regulator with the vision to recognise the importance of digital that is leading the way in creating effective tough but practical rules. Yet the opportunity to create a new industry in which the UK could be a world leader looks likely to be lost because of an ombudsman service that is no longer fit for purpose.
The British public deserves and the British economy needs an ombudsman service able to meet the challenges of the 21st century, not a hangover from the 20th. Boorman’s remarks should highlight to the Treasury the enormous risks to the wealth of the nation and its citizens if the FOS is not urgently reformed.
Ian McKenna is director of the Finance & Technology Research Centre