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Review needs tougher tone

The Hunt review of the Financial Ombudsman Service does not go far enough. It is right to call for a clampdown on claim- chasers when they pursue vexatious claims but this needs to apply to the public as well.

We do not believe the review has examined the grounds for advisers to be allowed an appeal properly. With appeals, the FOS would begin to resemble a court system and that has downsides but if a body can make a decision that removes someone’s livelihood, then there are strong human rights’ arguments for a proper appeal system.

We also do not believe the funding system works. The idea that the complaints’ procedure should be free to consumers in a prevailing compensation culture has led to a huge inflation in the cost of advice. We have seen instances where the FSA has said it will not regulate retrospectively while most advisers believe the FOS has been doing just that.

We think consumers should have to pay a refundable bond to help weed out spurious claims. No system is perfect but the FOS, as currently constituted, contributes to a climate where some investors who lose out, try to get their money back even when they knew the risks.

The FOS needs to be reformed so those who have been missold have access to redress without those who have not been missold regarding it as a failsafe against poor returns.

The Hunt review’s recommend-ations do not achieve this.

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