View more on these topics

MPs slam plans for FOS review

MPs on the Treasury select committee have slammed the Financial Ombudsman Service’s plans for how it will review past cases for evidence of poor decisions.

FOS is planning to review decisions made soon after it reorganised in 2016, and has provided details of its proposed methodology to committee chair Nicky Morgan.

FOS has outlined a two-stage process, where Deloitte will review a sample of cases to see if they adhered to the required standards, before former Claims Management Regulator board member Carol Brady will look at any cases that did not apply the right controls to see what the outcomes have been.

However, in a letter to FOS chief executive Caroline Wayman, Morgan has criticised the plans for placing “too much emphasis on process.”

She says: “Whilst all the correct boxes may have been ticked when a case was being processed, it doesn’t necessarily mean that a correct case decision was then made.”

Morgan adds: “Many people have contacted the committee with concerns that the FOS has failed to act with due diligence in their cases. To ensure that the public can have full confidence in the FOS’ review, and the FOS itself, it must properly asses case outcomes, as well as process.”

Morgan is also critical of the test the FOS plans to use to judge decisions by.

She says: “It’s concerning that cases will be tested against the ‘Wednesbury reasonable test’, that is, the ombudsman’s decision would have to be considered irrational as well as unreasonable. This is an extremely high bar as decisions can be poor without necessarily being Wednesbury unreasonable.

“In its current form, the review will do little to help restore public confidence in the FOS.”


Royal Court of Justice High Court 480

FOS ruling cannot add new duties for Sipp providers, court hears

Upholding a Financial Ombudsman Service ruling against a Sipp provider over due diligence failures would not create new requirements for the market as a whole, a judicial review into the decision has head. A court is currently hearing arguments as Berkeley Burke challenges a ruling that it, as a Sipp provider, could be held responsible […]

Tapering of annual allowance – adjusted and threshold income

The definitions of adjusted income and threshold income used to determine whether, and to what extent, someone’s annual allowance will be reduced can be confusing.  Here we try to make sense of it all. The annual allowance will be reduced for high income individuals from 6 April 2016.  Our previous article Tapering of annual allowance […]


Virgin Money completes sale to CYBG

CYBG has completed its takeover of Virgin Money bank in a deal worth £1.7bn today. The parent company of Yorkshire Bank and Clydesdale Bank says the deal will lead to the UK’s “first true national banking competitor to the status quo.” The combined company has over six million customers with around £70bn of customer loans, […]

Investment Clock dips into mild Stagflation but this could be temporary

The Investment Clock model that guides asset allocation within our multi asset team has dipped into Stagflation territory amidst a deteriorating economic backdrop and fear of trade wars looming. Hiroki Hashimoto takes a closer look at the situation and explains how we expect this dip into Stagflation could be both mild and temporary. Read the […]


News and expert analysis straight to your inbox

Sign up


There are 6 comments at the moment, we would love to hear your opinion too.

  1. The cut-off date of 2016 also brings the whole review into disrepute. Bad decisions were made before that date too and the change of process and recruitment did not alter the fact that there were incompetent people making the wrong judgements in the face of prima facie evidence to the contrary in the years before that.

  2. I keep saying this, but for hundreds of years case Law has set precedence for claims outcomes. Contract Law provides clear precedence to follow and case law.

    The Wednesbury reasonable test removes the principle of Caveat Emptor, which the FOS relies on to justify certain outcomes, especially concerning financial advice. Further more it allows the FOS to compensate consumers based on the Jelly Fish defense (I have no brain)that they did not understand, which when large amounts of money are involved, clients are more than happy to adopt.

    With the FCA’s current suggestion to raise the limit of allowable compensation awarded by the FOS to £350,000, the Wednesbury principle needs to be reviewed, preferably removed.

    I also feel that consumers should have to pay for a complaint, even if this is set at a very low token payment. With no consequences to their actions the current system is not balanced. If it can be proven the client has tried to mislead the FOS, offered false statement, there must be consequences.

    The FOS may work well when dealing with general insurance, general banking disputes, but often fails when judging financial advice. They have a record of frequently using minor technicalities to award consumers claims. A prime example of this would be every adviser suitability letters stating the absolutely obvious, such as “If you spend all you pensions funds, you will not have any income”. What is even more frustrating is when signed documents by clients stating they have been explained all the risks and their understand all the risks being rejected by the FOS, as it is to completed and the client signed it, but did not understand. This to me means the consumer can make as many stupid decisions they wish knowing they have a get out of jail card free.

    I would also like to add, that DB Transfer compensation should result in the client having to purchase an annuity. If they should not have been moved from a fixed income, no return of funds on death, this is what they should receive as compensation.

    • To be clear, the FOS make decisions on an Ombudsman considers a ‘fair and reasonable’ basis taking account of the FCA rules and law.

      Wednesbury unreasonableness is a test applied when challenging an FOS decision in court on grounds of rationality. To successfully challenge the FOS you have to show their decision was “so unreasonable that no reasonable person acting reasonably could have made it”. Essentially the decision must be shown to be irrational – a high bar to get over.

      There are other grounds to challenge an FOS decision, namely:

      Illegality; e.g. misdirecting itself or acting outside its powers.

      Irrationality; in addition to Wednesbury unreasonableness there is also considering irrelevant matters or not considering relevant matters.

      Procedural unfairness; e.g. not following procedures or the decision-maker showing bias.

      In many if not most cases, even if you win the ‘remedy’ is that the FOS must reconsider it’s decision. Perhaps unsurprisingly they will often fix the legal defect and come up with the same decision, e.g. arrive at the same result for different, now ‘reasonable’, reasons.

      Perhaps more fundamentally, one of the basis tenets of the Rule of Law is that everyone is equal before the law and no one is above it. Whilst the Ombudsman might meet that standard on a technicality, it sure doesn’t morally or ethically and that’s wrong.

  3. The whole FOS complaints system, needs an overhaul. Totally loaded against the adviser in favour of clients that, on probably a lot of occasions, were lying through their teeth. Many advisers have said, in the past, clients should have to stump up something towards paying for their complaint to be heard, especially if it fails.
    Seems fair to me.

  4. Hilarious it really is……

    Did the TSC not realize that this was going to be a sham as soon as the FOS was allowed to pick and auditor and conduct this review internally ?

    My first thought is, bloody hell this must be costing a kings ransom, still nobody wastes other peoples money like a bureaucrat.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm