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Regulator is right not to increase ombudsman limit

Having been closely involved with two of the cases referred to in Adam Samuels’ article headlined, Power Failure at FOS, (Money Marketing, June 14), I do take issue with the main thrust of the article, namely that the FSA looks foolish in declining to raise the ombudsman’s jurisdiction limit.

In my opinion, the FSA looks nothing of the sort. The Financial Ombudsman Service is wholly unsuitable for resolving bigloss cases.

We can all recognise that the FOS has a role in resolving disputes but its procedures are based on the desire to minimise costs and promote access to justice.

However, while one can live with the “rough and ready” results that this will understandably deliver for small-value claims, the limitations of the service need to be recognised.

In particular, the reluctance to hold oral hearings and the inability to summons witnesses make it a completely unsatisfactory jurisdiction to resolve high-value claims.

It would be grossly unfair to compel an IFA and their insurers to pay more than £100,000 where the client’s version of events is disputed without the client being subject to oral cross-examination.

It is simply not the case that FSA consumer protection is inadequate for those with big losses. Consumers have access to arguably the best legal system in the world which has been developed over many centuries to deliver true justice in a case.

The advent of no-win no-fee solicitors backed with legal cost insurance make it perfectly possible for consumers with valid complaints to pursue them through the courts.

It is not treating your customers unfairly to raise legitimate defences to claims and the FOS is not the final arbiter of that on claims over £100,000.

The FSA recognised the limitations of the FOS procedures that are inherent in any cheap and cheerful delivery system and were absolutely correct in resisting the pressure to increase the limit.

An increase to the limit would undoubtedly have advantages to consumers but the burden of unjust decisions falls too heavily on individual IFAs.

Martin Archer
Legal and claims director
Collegiate Claims


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