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Merricks says FOS acting as a surrogate regulator

It may be “inescapable” that the Financial Ombudsman Service acts as a surrogate regulator due to a surge in single-issue complaints, claims chief ombudsman Walter Merricks.

In this month’s Ombudsman News, Merricks reveals the FOS has had over 25,000 payment protection insurance complaints since January, a fivefold rise from 5,000 complaints in 2007.

Merricks says responding to large-scale surges in complaints driven by single-issue consumer campaigns is becoming a regular feature of the FOS workload.

He says: “Traditionally, of course, the ombudsman’s role was seen as dealing with individual disputes relating to one-off issues. So some eyebrows may be raised at the idea of the ombudsman service now handling a workload involving thousands of similar complaints, all involving the same financial product or problem. The actions we necessarily have to take in order to address the complaints may result in our being accused of acting as a surrogate regulator but that may be inescapable.”

Merricks says the “ideal solution” to mass problems is for financial businesses to treat their customers fairly, either because they recognise it is the right thing to do or because of effective regulatory scrutiny.

He says: “Where this does not happen and a single issue arises that directly affects large numbers of consumers, it would surely best be resolved collectively rather than relying on individual consumers each having to make their own separate complaint.”

Philip J Milton and Company managing director Philip Milton says: “Why should the FOS have to get involved in widespread complaints such as payment protection insurance? When authorised firms receive complaints, they should reflect the FSA’s ruling on whether something was missold or not.”

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