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Mutuals protest at FOS ‘short cuts’

The Association of Financial Mutuals believes the Financial Ombudsman Service is rushing through some cases without proper consideration.

AFM chief executive Martin Shaw says the ombudsman is operating outside of the rules.

He says: “The FSMA and the FSA rulebook say the ombudsman should give a fair and impartial service arbitrating on complaints. We are seeing some short-cutting of that fair process to try to get through cases quickly. The ombudsman looks at how it resolved similar complaints in an effort to speed up the process instead of treating each case on its merits and investigating thoroughly.”

Last month, Shaw called for the ombudsman to be made a formal subsidiary of the Financial Conduct Authority, saying it would increase accountability and improve its operation.

An FOS spokesman says fewer than 200 cases out of the 200,000 received by the ombudsman last year were about friendly societies and adds the service considers each case on its merits.

He says: “The ombudsman looks at complaints thoroughly, considering the specific circumstances of each case as we are required to do by law.”

Positive Solutions certified financial planner Aj Somal says: “The ombudsman, like everyone, is probably looking for ways to make efficiencies.”


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

  1. Incompetent Regulators Awards Team 14th April 2011 at 3:25 pm

    I have it from good authority that the FOS expect a certain number of complaints to be upheld and in particular from networks. So does that mean the FOS is an ADR e.g. Alternative Disputes Resoltion Body or a Comsumer Champion? Answers on a postcard to the Treasury Select Committee and to the government

  2. Martin

    You say: The Association of Financial Mutuals believes the Financial Ombudsman Service is rushing through some cases without proper consideration.

    I say where have you been since FSMA 2000. The FOS is designed to rob from the adviser and give to the consumer. A regulatory Robin Hood in Reverse!

  3. I would draw your attention to the FSA intranet pages providing help to IFAs, specifically which covers this issue.

    We recognise (FOS/FSA) that frivolous or vexatious complaints may raise unnecessary administrative burdens for both firms and the FOS alike. In these circumstances, we think it would be legitimate for firms, through their terms of business, to seek to reclaim costs and expenses reasonably incurred by the firm as a result of defending these complaints through the FOS.
    The question of what is frivolous or vexatious would need to be determined on a case-by-case basis; this would undoubtedly only be in a very small minority of cases. Our starting point would be that, if the FOS did not dismiss a case during its initial review under rule 3.3.1(2) of the FSA Dispute Resolution: Complaints manual, the claim should not be regarded as frivolous or vexatious.

    Now just for laugh go ask FOS for the numbers of rejected complaints on the basis of being frivolous or vexatious! Last time I asked it was less than a handfull. Any Statision will tell you that this is an imposibly low figure and must represent a consumer bias. Even Walter Merrick said that 25% of CI applications were based on non disclosure!

  4. “An FOS spokesman says fewer than 200 cases out of the 200,000 received by the ombudsman last year were about friendly societies”

    What does the relative number of complaints about friendly societies have to do with it?

    There are more than enough complaints about the ‘service’ provided by the FOS to justify an overhaul, might as well scrap the FSMA 2000 while we are at it, it isn’t working. Hector Sants and Andrew Tyrie agree with me on that score.

  5. One thing seems pretty certain, namely that the FOS is overloaded with hitherto unresolved complaints, a large proportion of which emanate from the banks and building societies.

    Add to that the FSA’s establsihed practice of instigating thematic reviews (for which read regulating by hindsight because it failed to issue proper regulatory guidelines in the first place, as it should have done) and it’s pretty easy to understand why the entire system is choked with a logjam of complaints that either ought never to have arisen or been settled without the complainants finding it necessary to refer their grievances to the FOS. This, I believe, might well be called systemic regulatory dysfunction or SRD.

    Still, never mind ~ all these problems will be solved by the RDR and by the FSA getting ever more staff, resources, power and money. Not.

  6. Incompetent Regulators Awards Team 15th April 2011 at 4:33 pm

    I say call the SFO and police into the FOS. I’m sure they will find a lot of very interesting things in there!

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