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Mandelson proposes consumer advocate to resolve group disputes

First Secretary of State for Business Lord Mandelson has proposed a new consumer advocate should be established to handle collective disputes relating to consumer credit agreements

The proposal comes in a white paper published today called A Better Deal for Consumers and suggests that the advocate should be able to take group disputes by consumers against a business to court.

It says: “We will address systematic unfairness to borrowers so that the victims of unfair treatment obtain proper redress.

“We will consult on whether the proposed consumer advocate should have powers to address unfairness in consumer credit agreements, including the possibility of challenging unfair relationships through the courts on behalf of consumers.”

Financial Ombudsman Service outgoing chief ombudsman Walter Merricks has previously said that finding a solution to the problem of how to deal with collective disputes would help to reduce the FOS’ workload.

In the FOS annual report for the last financial year Merricks said: “A solution to the problem would reduce the volatility of the ombudsman service’s workload, adjust unrealistic expectations of what we can be expected to deliver, and ease tensions between the financial services industry, its regulator and its ombudsman.

“Above all, it would be a real step towards re-establishing the confidence of consumers in financial services.”

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