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The UK Financial Ombudsman has been overhauled and to stop acting like a “semi-regulatory authority,” the mayor said Thursday that it opened the door to the potential introduction of a new appeals process to challenge the decision.
Emma Reynolds said the conclusions of the review she was leading to Financial Ombudsman Services will be announced next month as an important part of the government’s financial services strategy.
The plan considered as part of the review is to take FOS into stronger control by financial conduct authorities by giving businesses the ability to appeal to watchdogs when the Ombudsman decision opposes them, according to those who have been described on the issue.
“Of course, FOS plays a key role in providing easy, independent dispute resolution to consumers and businesses.
“But it cannot and should not function as a semi-regulator. Changes are needed to provide greater predictability and clearer expectations for relief for all parties.”
The proposed move to curb FOS authority is part of the broader ministerial push to promote economic growth by easing regulations. This follows the government’s decision to x UK payment watchdog in March and to kick out the chairman of the competition regulator in January.
FOS scrutiny has threatened to become one of the nation’s biggest financial scandals after the ruling that UK consumers complain about allegedly mis-selling car finance, with lenders sacrificing £440 billion in relief.
Prime Minister Rachel Reeves said last year that the relationship between FOS and FCA will be reformed to improve the way “historic market practices and mass relief events” are handled.
Abby Thomas suddenly resigned as FOS CEO in February © Charlie Bibby/ft
The Ombudsman has already endured a period of upheaval after Abby Thomas suddenly resigned as chief executive in February and a permanent replacement was still discovered, and its chairman, Barones Zahida Manzoa, is also scheduled to leave in August.
The FCA appoints the board of directors of the Ombudsman, but FOS has the crucial room to make its own decisions on more than 200,000 cases per year mentioned by people who are dissatisfied with how complaints are being addressed by financial services providers.
If a company can challenge a FOS decision, it considers it inconsistent with FCA rules, referring it to Watchdog will significantly undermine its independence.
“We agree that after 25 years of operation, we have a timely opportunity to review the entire system,” FOS said. “That’s why we work closely with the FCA and the HM Treasury to ensure that the system is in line with the future, including the important role it plays within it.”
FCA Chief Student Nikhil Rathi©Thomas Krych/Zuma/Reutes
Reeves plans to set up a financial services strategy at its Set Piece Mansion House speech in the city on July 15th.
FCA CEO Nikhil Rathi told The Cityuk meeting that Prime Minister Keir Starmer has made nearly 50 proposals in response to a request to do more to support growth and competitiveness.
“More things are coming,” Rathi said, adding that he will soon begin consultations on “reducing securitization friction” and reforming listing rules to make it easier for businesses to raise capital.
Rathi also said it was “urgent” about how the FCA would reform its financial advice rules and make it easier for businesses to provide guidance to consumers on how to invest without becoming subject to troublesome regulations.
