This is a hot potato, as the FOS is consulting on extending its jurisdiction, calling this, ‘a special opportunity for brokers.’
Advisers will be subject to compulsory membership when the FSA takes over regulation of advice in 2004.
Joining voluntarily could be advantageous as a broker, because you will become familiar with arrangements before your peers do, possibly deriving a marketing advantage from pointing out to clients that you subscribe voluntarily.
It seems the only tangible benefit is to your clients rather than yourself. They could have a complaint against a lender and intermediary dealt with jointly; also, the scheme claims to be better at preserving the client-broker relationship, as the FOS resolves twice as many cases by mediation as by formal investigation, producing a fair result.
A key advantage the FOS claims is you may escape criticism if it was the lender’s fault ‘ not your’s. It states: ‘if the complaint should really have been made against the lender rather than the broker, compensation can be awarded against the lender.’
Await the outcome of the consultation process before joining, or participate in the consultation and make a difference. Visit www.financial-ombudsman.org.uk/publications/guidance/extending-our- jurisdiction.pdf.