New measures have been announced today to streamline and modernise the Financial Ombudsman Service (FOS) following a joint consultation with the FCA.
The measures mark the next step in a series of reforms to the complaints process, the FOS said.
They include a new registration pre-checking stage which will ensure cases are within scope and ready to be investigated.
There will also be new powers to dismiss complaints to help focus the service’s resources on the cases it was originally set up to resolve.
There has been criticism in the past that the FOS was in some cases creating new regulations with its detailed judgments.
The FOS said the measures were part of a wider package of reforms to the redress system – including legislative changes – to support confidence in financial services, so that consumers get fair and quick compensation when things go wrong and regulated firms have more certainty to invest, grow and compete.
The reforms include:
• An amendment to rules to provide greater clarity that the Financial Ombudsman’s decisions are based on the standards applicable at the time of the act, or omissions complained of, and will not be applied retrospectively. This provides a foundation for proposed legislative changes to the FOS ‘fair and reasonable’ remit which is currently progressing through Parliament.
• New powers to dismiss complaints that are not appropriate for the Financial Ombudsman and may be better resolved – or are already being investigated - in other ways. These include complaints that may be better suited to court, law enforcement, or another dispute resolution process, or where there has been no financial loss or material distress or inconvenience. These will come into effect on 1 October.
• A new registration stage to be rolled out next year, following a consultation on differential case fees later this year, to ensure that complaints referred to the service are within its scope and ready to be investigated before being allocated to a caseworker. This will continue the service’s work to provide a fairer funding model to better reflect costs and support earlier resolution of disputes.
Later this year the FOS says it will publish the first of its joint thematic reviews with the FCA to provide more insight on the types of complaints the service sees and its approach to resolving them. It said that will help to inform firms’ own complaints handling and prevent similar cases from needing to be escalated to the Ombudsman and also demonstrate how outcomes are aligned with regulators’ rules.
James Dipple-Johnstone, chief ombudsman at the FOS, said: “We are driving forward reforms to bring consistency and predictability to the redress system – helping to underpin confidence in financial services, ensuring major or emerging issues are escalated earlier, and supporting firms with better insight to help them address and resolve customer issues more effectively and proactively.
“This is an important part of the wider package of reforms, and we will continue to work closely with the Government, the FCA, consumer groups and industry stakeholders on this significant transformation of the redress system and the way our service operates within it.”
The FOS has also updated its Memorandum of Understanding with the FCA to ensure its decisions are aligned with regulatory rules, charges for professional representatives to refer cases to ensure costs are fairer and cases are better evidenced, and changes to the interest rate applied to some of the awards the Financial Ombudsman makes to better reflect present economic conditions.
The service said it has also made a series of digital improvements, with online portals for businesses and consumers rolled out and an enhanced online complaint form streamlining and simplifying the complaint journey as part of its drive to be easier for customers to use.
Legislative changes to the way the redress system and the FOS operates are progressing through Parliament in the Financial Services and Markets Bill.