The Consumers Association (CA) has offered solutions for the "regulation gap" with mortgages and insurance policies. It is trying to offer a solution for the problem where people have bought mortgages and insurance before regulation is introduced (to bring them into line with life, pensions and investments) i.e. next year.
The gap is for those who buy a policy or mortgage before regulation and then have a problem and wish to complain when regulation comes into force. The complainant technically has no real enforceable rights to complain via the regulator as there was no regulation in force at the time. The CA is suggesting that the Financial Ombudsman Service could form an experienced mediator in such circumstances and avoid the only current route of heavy legal costs.
Our view
Great idea but the Ombudsman is already creaking under the pressure of complaints for endowments and pension mis-selling etc. Who will pay for more staff? For example, why should as an authorised financial adviser, along with many others in investment business who have paid for levies and fees to be authorised and fund the ombudsman – now have to subsidise mortgage brokers and general insurance broker fees?
These soon to be newly regulated general insurance brokers (house, motor, offices insurance etc) and mortgage brokers have already been offered substantially lower fees to become regulated than which an independent financial adviser, such as ourselves, has to pay.
Now the CA expect us to subsidise their complaints costs before they become regulated! We already pay enough for others mistakes – we suggest their fees are increased to fund any additional complaints handling costs - get them to pay more!