The Association of Independent Financial Advisers (Aifa) has called for the structure, processes and charges of the Financial Ombudsman Service (FOS) to be given a radical overhaul. What do you think of such an idea, and what do you think of the Hunt Review in general?
Fay Goddard, Aifa
The FOS should change its structure, processes and charges to make it more transparent, accountable and easier to do business with - but we are looking wider than just accessibility and transparency.
The best outcome for our members, and the industry, would be the creation of a dedicated small firms division. This would help to build confidence and trust, and protect both firms and consumers. Firms within the new division should have access to an oral hearing. Another positive outcome we are calling for would be transparency over the guidance and training provided to case handlers, so that small firms can handle cases appropriately.
The statute of limitations should be rooted in the FOS' processes. IFA firms should have the same legal protection as other UK businesses - this neither restricts a consumer's ability to claim, nor overly favours firms.
In addition, case fees can be a significant burden for small firms, despite only being a fraction of the FOS' case load in comparison to that of the banks and insurers, which is why we are calling for 10 free cases. However, we believe that firms with particularly high levels of complaints should be named and shamed with the relevant numbers publicised. We need to ensure that consumers understand who they can trust. Louise Cuming, Moneysupermarket.com
In my view, it is premature to talk about a radical overhaul at this stage. However, reviewing current procedures is certainly appropriate. From an industry perspective, most complaints dealt with by the FOS relate to endowment and pension mis-selling. As mortgage and insurance regulation remain relatively new, meaningful management information from the FOS in respect of our industry is not yet available. It has, however, been recognised that there has been an increase in payment protection insurance complaints, in line with industry awareness of potential mis-selling.
In addition, if the mortgage market continues with the downturn and arrears or possessions increase, we could see a rise in mis-selling complaints for firms that have not adequately addressed affordability.
The Hunt Review scope is two-fold. It is considering, from an external perspective, whether the Ombudsman should do more in order to be visible and accessible to those it is designed to serve, and it is considering whether the FOS is making effective use of the information and experience derived from its dispute resolution work. These are both questions that need to be addressed, and should improve the overall service of the FOS and, potentially, regulatory standards across the industry. This will provide consumers with greater protection and improve confidence, which is something we all strive towards.
Alan Lakey, Highclere Financial Services
By establishing the original insurance, investment and pensions ombudsman bodies, the financial services industry aimed to redress an imbalance where consumers enduring a dispute had no other option than legal action. The idea of an independent disputes resolution service remains sound but the reality for many is the 'natural justice' championed by the FOS contains elements of injustice. However, while the Hunt Review will examine the accessibility and transparency of the FOS, its remit also enables wider issues to be scrutinised - it is these that the few adviser-focused respondents have centred on.
Aifa, like the IFA Defence Union, has proposed a menu of changes that would realise a fairer balance between the reasonable expectations of consumers and the commercial requirements of firms. The current arrangement denies firms a number of protections enshrined within UK law, and many believe the FOS is acting illegally and breaching Article 6 of the Human Rights Act.
The suggested changes are not unreasonable, but what is surprising is Aifa's failure to lobby for an independent appeals system. This is essential because the FOS acts as accuser, advocate, judge, jury and appeals court. Modern society places an emphasis on fair and reasonable treatment but financial services practitioners are deserving of a similar courtesy, and hopefully the Hunt Review findings will reflect this.
Peter Le Beau, Le Beau Visage
I watch a significant amount of football, and note that whatever decisions referees take they tend to be criticised - this also seems to be the case with the FOS. Despite the fact that in protection issues the Ombudsman finds in favour of the industry in more cases than it does for consumers, several parties are upset. This is seen by consumers as an industry fit-up, but at the same time many in the industry believe that they lose many cases where they have acted fairly. So like referees, the FOS finds it hard to please anyone.
Perhaps the FOS is more guarded in public pronouncements, but surely it should be entitled to comment on what it sees passing before it? I have never known the FOS to refuse an invitation to speak or to dodge difficult questions when they are fired. The biggest complaint I have heard against it is the time taken to resolve disputed cases, and the nine-month time frame experienced in some situations causes a very difficult hiatus for all parties involved.
The system works well in the areas that are of particular interest to advisers. We need an impartial observer who can act as an informed arbitrator, and it is hard to see a system funded by anyone else other than the industry.
As for the Hunt Review, I can think of few finer men to conduct such a review. David Hunt will be a beacon of fairness and good sense - the only question is whether he will be given the right brief.
