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Watchdog warning that FOS decisions will set precedent

The industry must accept the inevitability that some decisions made by the Financial Ombudsman Service will become precedents, says chief ombudsman Walter Merricks.

Speaking to Money Marketing, Merricks says it is contradictory for the industry to complain that the ombudsman is setting a precedent through its decisions and, on the other, accuse it of being subjective.

He defends the FOS&#39s position, saying there will be cases where no other body has made a decision on the types of matters before it or it may be slightly unclear as to how a particular law or piece of regulation should be applied to a particular set of circumstances.

Merricks says: “We do not dream these things up out of nowhere and we do not proactively look for cases. If no one has had to make that decision before, inevitably the ombudsman is cast in the front line to do that. What we try to do is think very carefully about what the implications of our decision will be and where we would draw a line.

“I hear people say it is terrible the ombudsman is setting a precedent, yet I also hear that it is terrible that decisions do not seem to be consistent. If the industry wants consistency, then the FOS would need to set precedents to follow.”

Nationwide spokeswoman Rosemary Callender says: “Naturally, we do not always agree with everything the ombudsman does but on the whole we think it is a fair service.”

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