Ann Foster, Chairman of the Consumer Panel said:
“Whilst we welcome many aspects of this review, we do have concerns about the potential consequences for consumers from changes to the Financial Ombudsman Service. The Ombudsman is an effective system for consumers to use when their complaints cannot be resolved by the companies. It works because it is simple, accessible and efficient. We welcome the idea of FOS and FSA working together more on cases which may have wider regulatory implications. However, we want to warn about adding an appeals layer for routine cases. We believe that could bring delays and confusion, as companies might use legal arguments to delay decisions. This could create an imbalance in the system for consumers who turn to the ombudsman service as a simple and straightforward means of settling disputes.”
The two year review of the Financial Services and Markets Act 2000 which set up the Financial Ombudsman Service(FOS) and the Financial Services Authority (FSA) has been announced by HM Treasury today. The Consumer Panel is pleased to see that many aspects of the Act which it asked to be reviewed have been included in this process. It will continue to press for actions to help consumers to understand more about the financial services they are buying and to protect them from wrongdoing in the market.
The Panel particularly welcomes:
- The commitment from the Treasury and the FSA to do more about financial promotions – an area where the Consumer Panel has campaigned for some time to gain quicker action by the FSA to stamp out misleading advertising, and to publicise any action which the FSA takes;
- The Treasury’s promise to clarify the boundary of regulation so that employers and advice centres are not constrained from giving simple advice on financial issues. This will go some way towards meeting the Panel’s wish to have a simple independent generic advice system available for all consumers;
- The FSA’s commitment to consult the Consumer and Practitioner Panels earlier on in their process of policy development and reduce the number of consultations;
- The Treasury’s commitment to review the effectiveness of the FSA’s work in consumer education next year.
The Consumer Panel will be considering all the consultation papers as they are published, and will be responding publicly to all those which affect consumers of financial services.
