AIFA director Robert Sinclair said the Ombudsman’s original purpose was to act as a middle man and “reconcile parties to an agreed solution on a fair and reasonable basis.”
“Too often in recent times they appear to act in a quasi-judicial way. This is not a positive development for either consumers or the industry,” said Sinclair.
This follows the FSA’s launch of its consultation paper, which aims to strengthen complaints handling by financial services providers.
Robert Sinclair, AIFA director said: “This consultation does raise questions about the overall operation of the Ombudsman. With the current changes to the regulatory architecture there should also be a complete review of its role and accountability and we will be pushing for this as part of the Treasury consultation on the future of regulation.”
Proposals include raising the limit on awards made by the Financial Ombudsman Service from £100,000 to £150,000 which aims to provide fairer and more effective redress for customers. The FSA had previously consulted with firms on raising the limit to £200,000.
Sinclair said: “Any proposal to increase the limit on awards made by the Ombudsman is not good news for firms. However, we should remember that IFA firms make up less than two per cent of all claims so this will have a greater impact on other sections of the industry.”
Further rule proposals include nominating an individual responsible for overseeing complaints handling and abolition of the two-stage complaints handling process to incentivize firms to resolve problems in the first instance.
The FSA also proposes firms perform some complaints analysis to identify systemic problems and resolve recurrent problems.
