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Neil Liversidge: Three steps to restore advisers’ confidence in the FOS


It is clear that so long as the Financial Ombudsman Service exists in its present form it will be mired in controversy. It is equally clear it will not enjoy the confidence of the adviser community and whatever the FCA’s longings for simplified advice, it will remain the de facto regulator.

Three simple changes to the way the FOS operates would transform it and go a long way to restoring advisers’ confidence in it. The first of these would be to require claims management companies to pay the case fee upfront on a non-refundable basis. At a stroke, by forcing claims management companies to put some skin in the game, this would eliminate a large proportion of meritless claims. As claims management companies take, on average, between 25 and 35 per cent of compensation awards anyway, they would hardly be out of pocket.

The second change should require payment of a small commitment fee by individual claimants, say, £50, refundable if their complaint is upheld.

My third proposed change, however, is the real path toward a fairer FOS. There should be a decisions review panel consisting of experienced advisers to whom firms, for a fee, should be able to refer FOS decisions before a final adjudication is formally pronounced.

The panel should not have the power to overrule the FOS but it should be able to ask it to reconsider adjudications where it believes it is merited. You might ask why I would charge advisers a fee. To which I would reply: because that is consistent with what I propose for claims management companies and individual complainants.

Charging a fee would weed out the bad losers and the vexatious as much with advisers appealing to a review panel as with consumers complaining to the FOS in the first place. The same fees would also, of course, fund the cost of the panel’s work.

Both advisers and complainants should be anonymised in cases referred for review. Ideally, the panel’s members should also be anonymous to head off any ideas of lobbying or bias, not to mention the earache.

But if the panel could not over- rule the FOS, what use would it be? First, the mere existence of a review panel would make adjudicators a lot more careful about the decisions they hand down. Second, the panel would be a resource for FOS adjudicators, making available to them the kind of experience and expertise it seems to lack.

Third, the panel would be able to gather data on the quality of FOS adjudications by reference to those referred to it. This could be the most useful function of all.

Whereas it is clear many advisers are unhappy at their treatment by the FOS, hard facts are always difficult to come by.

However aggrieved they feel at the perceived injustice, many advisers have no wish to publicise the fact they have lost a case. Taken together, these measures would truly improve the service and restore advisers’ confidence in it.

Neil Liversidge is managing director of West Riding Personal Financial Solutions 



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. I kind of agree here but in reality it’s another committee and no doubt it will be made up of people from Which?, Ros Altman and suchlike.

    The only way to get high quality decision making by the FOS is to give advisers the right that has been enjoyed by clients for years; the ability to place the FOS decision before a court. In reality this would be the advisers PII insurer verses the FOS but a few losses would make the FOS very careful to follow due process and the standards required by a court.

    Poor advice should be compensated but good adviser should have the law on their side.

  2. Soren – please note that I’ve proposed – ‘There should be a decisions review panel consisting of experienced advisers’.

  3. Soren, the problem is that the FOS would be happy to keep going to court. Who do you think would pay their astronomical legal costs if they lost?

    The FOS levy would go through the roof. The only winners would be those nice barrister chappies who went to the same public schools as the people at all the Quangos, Big 4 accountants, Bank execs and politicians.

  4. Neil – I appreciate what you wrote but these committees always seem to end up populated by the do-gooders who actually do endless harm. There is no way on earth that the FOS will populate it with advisers.

    Phil – Really? How many times can the FOS afford to lose before the credibility of their process completely collapses. In reality any loss would be really embarrassing and they would quickly ensure that their decisions would stand legal scrutiny. Like Neil’s suggestion, mine means that there is an external oversight of FOS but going to court would mean that the oversight was very public.

  5. Phil has a point. But isn’t this all rather putting the cart before the horse?

    Perhaps if advisers were a great deal more fastidious in who they took on as clients perhaps they just might have fewer complaints in the first place. Never mind ‘the advice gap’; in certain circumstances it may be wise to increase it.

    And of course keep records as if you were in the KGB. Knowing where your clients have buried their skeletons does give you a decent amount of leverage – just in case!

  6. I am sure that if you were to ask the FOS, they would see no shortcomings whatsoever in the work of their adjudicators and for this reason alone, the idea would not be entertained. What we as advises think does not matter one iota I am afraid. For my part I agree that adjudication by property qualified and experienced, even regulated individuals would be good, but we cannot afford that so we get the next best option, whether we like it or not.

  7. Qualifications and experience? Most FOS adjudicators have neither. And there are countless examples of adjudicators favouring a complainant’s undocumented version of events over the adviser’s documented version of them (so there’s precious little impartiality either), often fuelled by unscrupulous CMC’s who in many cases write the complaint for the supposed “victim” of bad advice. Add to that unlimited liability and it’s easy to see why advisers consider themselves to be hemmed in between a rock and hard place.

  8. BTW, Neil ~ To what extent, if any, are your proposals embodied in APFA’s strategy on this issue?

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