The Government is reviewing whether the Financial Ombudsman Service is delivering its role as a dispute resolution service, rather than acting as a ‘quasi-regulator’.
Chancellor of the Exchequer Rachel Reeves has put a new ‘Action Plan’ together to review the UK’s wider approach to regulation.
At the launch of the plan, the Treasury said the UK’s current regulatory landscape “is not functioning as effectively as it should and too often holds back growth and inhibits private sector investment”.
The Economic Secretary to the Treasury will examine whether the FOS, as it stands today, is delivering its role as ‘a simple, impartial dispute resolution service which quickly and effectively deals with complaints against financial services firms and which works in concert with our Financial Conduct Authority which regulates the sector’.
The Economic Secretary will focus, in particular, on a range of points that have been raised as part of the Government’s consultation on the growth and competitiveness strategy.
This will include addressing concerns around:
- The framework in which the FOS operates which has resulted in it acting, at times, as a quasi-regulator.
- Whether the FOS is applying today’s standards to actions that have taken place in the past.
- The practices that have grown up over time on compensation.
Stephen Haddrill, Finance and Leasing Association director general, welcomed the Chancellor’s statement.
He said: “The current situation in the consumer credit sector is that firms spend millions of pounds complying with FCA rules, only to fall foul of the Financial Ombudsman Service’s reinterpretation of those rules.
“Managing risk in this sector is expensive, time consuming and subject to massive uncertainty, which Claims Management Companies can then exploit, undermining the investability of the market.
“The dynamic in the UK regulatory landscape does not work for lenders or customers and does not adequately support growth.
“We want one clear set of rules that firms follow, and that the FOS adheres to when adjudicating cases.”