The Treasury has produced three proposals to address what should happen to consumers who currently have protection through the Mortgage Code Arbitration Scheme or the General Insurance Standards Council Dispute Resolution Forum but want to complain about products sold to them before FSA regulation:1
* Provide no redress for consumers who have purchased products before FSA regulation. Consumers will therefore have no option other then to go through the courts. Not only will this make complaining more difficult it will also be hugely costly for consumers.
* Give industry responsibility for consumers who have purchased products before FSA regulation. This option would reduce the level of protection offered to consumers.
* Give the Financial Ombudsman Service responsibility for consumers who have purchased products before FSA regulation. The Ombudsman has a wealth of experience in dealing with consumer complaints and many providers already come under the Ombudsman’s remit. It would not be difficult to expand this brief and would provide consumers with a one-stop-shop for complaints.
Consumers’ Association has warned the Government that the only way to ensure a full, affordable and accessible complaints system is to transfer responsibility to the Financial Ombudsman Service.
Laurence Baxter, Senior Policy Adviser, Consumers’ Association, said:
"We are very concerned by proposals to leave consumers with legitimate issues, completely out to dry. All consumers should have access to redress irrespective of where and when they bought their product.
"Consumers who bought financial products with the promise that they were protected have a right to expect this promise to be honoured. A Government decision to renege on this commitment will not only cost consumers dear, it will reduce consumer confidence even further.
"Giving industry responsibility for those consumers complaints who will not be protected by FSA regulation is outrageous. Extending the Ombudsman’s remit would be a far more effective solution. Not only does it have an excellent track record in dealing with consumer complaints, it has already earned consumers’ trust."
