A report by the Institute of Economic Affairs (IEA) titled “Who regulates the regulators” The Financial Ombudsman Service (FOS) is failing to deliver on its primary objectives in providing fair and reasonable resolutions of disputes in a timely manner and not providing value for money in the support of competition and consumer welfare. The report says the FOS is unfit for purpose and lacks accountability and transparency and that major reforms are required.
Earlier this month Caroline Wayman former Chief Ombudsman announced her resignation in the middle of a backlog of complaints and talks of making 150 staff redundant.
Victoria Hewson Head of Regulatory affairs in the IEA report highlights debates over the fairness of FOS decisions and compensation levels. In 2019/2020 the cost of dealing with each case amounted at £920 higher than the budgeted amount of £650.
The report is questioning if the FOS is the right route to deal with these difficult issues now the maximum award has increased to £350,000 from £150,000.
The report argues that less well-off customers are being excluded from financial advice as it is not cost effective.
An FOS spokesperson said: “We have helped millions of consumers resolve their problems with financial businesses, excluding PPI we received around 50% more cases than usual and currently helping thousands of complaints from people including people that have had their lives and businesses impacted by Covid-19. To reduce waiting times for customers and to continue to provide an effective service we have recruited new staff and if anyone isn’t satisfied with how their compliant to a financial provider has been dealt with, they can contact us and confidently use our services”.
The whole issue of complaints is a disaster. Millions of complaints every year stimulated by poor practice due to poor regulation of the sector but also due to 'ambulance chasing' claims management companies, ironically also regulated by the FCA and usually ran by failed financial advisers who wne up helping people claim for poor advice that they were probably party to.