Lord Hunt’s review into the Financial Ombudsman service has ruffled more than a few feathers on both sides of the divide.
While many have applauded individual recommendations, much of the feedback coming from industry bodies and adviser firms is that the review failed to live up to expectations.
Perhaps the biggest disappointment for advisers was that Hunt resisted pressure to recommend a case fee for complainants or an outcome-based fee structure.
The report states: ‘The dangers of making a radical shift to outcome related case fees, sometimes referred to as “polluter pays” funding would outweigh the putative benefits.’
This comes despite the recent County Court Pickering ruling which suggested the FOS was unfair to charge advisers whose claims were rejected.
The ABI has flagged up the fact that Hunt has rejected calls for an external appeals process, saying the ombudsman’s decisions can have far-reaching consequences.
A spokesman says: “We are therefore disappointed that Lord Hunt dismisses the idea of an external appeals process.”
But there has been widespread support for Hunt’s suggestion to introduce a case fee for vexatious claims put forward by claims chasers, with some calling for the fee to be extended.
Aifa director general Chris Cummings says: “We are disappointed that this did not go further. Anyone bringing frivolous or vexatious claims should have to pay a case fee.”
The review also recommends that the base of FOS levy-payers be expanded to include regulated claims managers, which could, in theory, lighten the load for everyone else.
Many advisers are also chuffed with the review’s recommendation for the FOS to ensure decision letters always contain the proposed amount of compensation, rather than a formula.
Cummings says: “This is an improvement on the current system of just providing a formula for claims. At least we will have the true figure of the amount of compensation awarded by FOS and know who the main culprits are.”
But the FOS has firmly stuck to its guns over this issue in the past and it is doubtful whether this recommendation will make it off the drawing board.
The FOS itself had a fairly predictable response to the review, labeling some recommendations as radical, while pointing to the impact they would have on the budget.
FOS Chairman Sir Christopher Kelly says he welcomes the suggestions and assures us that the FOS will consider them to ensure that transparency is at the heart of its service.