In an open letter to Emma Reynolds, Economic Secretary to the Treasury, Ahmed Bawa (pictured), chief executive of Rosemount Financial Solutions, said the dispute resolution service was acting as a “bottleneck, draining confidence and innovation for firms operating in the advice industry”.
This comes shortly after the Treasury said it would review the FOS and its role, over concerns it operates like a “quasi-regulator” in the financial services sector.
It published a paper, New approach to ensure regulators and regulation support growth, where it said the “current regulatory landscape is not functioning as effectively as it should”, and claimed it held back growth and private investment.
The government also said regulation could be complex and duplicative, which stifled progress and innovation. The Financial Conduct Authority (FCA) has since been working to simplify its rules and remove any duplication.
In Bawa’s letter to Reynolds, he said the FCA did support growth but its efforts would be “thwarted” unless there was a culture change at the FOS.
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He said there was a problem with the way the FOS operated and said it acting like a quasi-regulator would not promote confidence or support growth in the financial services sector.
He added that the FOS applied today’s standards to incidents that happened in the past and claimed its approach to ongoing advice differed from the FCA.
“Unless there is real change in the way the FOS operates then, try as it might, the FCA’s attempts at helping the industry will have little impact,” Bawa added.
A spokesperson for the FOS said: “We are an independent dispute resolution service designed to resolve cases on their individual merits taking into account relevant law, regulation and good industry practice, and with minimum formality. In the majority of cases, we find that financial firms have acted properly.
“This year we’ve become the first UK Ombudsman to introduce charges for professional representatives – not only making our funding model fairer, but also encouraging better due diligence when they bring cases to our service.
“We’re also working closely with the Financial Conduct Authority and HM Treasury on an ambitious modernisation programme which will reform the dispute resolution system, making it fit for the future.”
