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Treasury quashes hopes for appeals

The Treasury review of the relationship between the Financial Ombudsman Service and the FSA has all but ruled out an external right of appeal for firms despite repeated calls from the industry for an appeal process.

The consultation paper, published last week, points out that establishing a right of appeal or giving a body the power to set aside an ombudsman&#39s final decision and replace it with a new one would require an amendment of the Financial Services and Markets Act which would need primary legislation.

It suggests improving the process before the final decision. It says if appeal rights were made available to firms, equivalent rights would also have to be available to consumers and underlines that if a firm invoked an appeal it would have to meet the costs regardless of the outcome.

Wider implications of cases are also considered in the consultation paper, which suggests that the FSA and FOS should nominate named individuals within both organisations as points of contact who would be able to receive recommendations from firms, trade bodies and consumer bodies.

The paper considers the use of test cases when the issue is predominantly a legal one, looking at referring the matter to the courts as an alternative to the FOS handling it.

FSA managing director retail markets Clive Briault says: “We are seeking to clarify the differing roles and responsibilities of the FSA and FOS when wider-implication cases arise.”

Chief ombudsman Walter Merricks says: “We also consult on the use of test cases as an alternative to us making decisions on cases that turn on a legal issue; a similar mechanism was available in the former PIA and Banking Ombuds-man Schemes.”

Aifa director general Paul Smee says: “This is clearly a very important paper but we must not expect radical change because primary legislation would be needed. With regard to appeals, IFAs must bear in mind that any new procedure would bring cost as well as benefit.”


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