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FOS and FCA should consult on new levy for ombudsman, review finds

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  • 12/07/2018
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FOS and FCA should consult on new levy for ombudsman, review finds
The Financial Ombudsman Service (FOS) and Financial Conduct Authority (FCA) should consider a new levy funding structure to meet the costs of the ombudsman, an independent review has recommended.

 

Medium-term costs based on case volumes should be predicted by the FOS, with the levy matching this projection with risks that firms bring to the market factored in, according to the review carried out by Richard Lloyd.

The review investigated claims of bias towards financial institutions, poor service, delays in case handling and other issues raised in a Dispatches programme on the ombudsman aired earlier this year.

In summary, Lloyd said he had found the FOS “provides an effective and essential service for many thousands of people”.

He added: “It is important that more consumers use the FOS, knowing that it is not institutionally biased against them, while realistic about its limitations and aware of their right to escalate complaints.

“But to retain public confidence the FOS must work hard to continuously improve the service it provides for consumers and businesses.”

 

Identify gaps in capability

Lloyd made a number of recommendations on service, organisation, governance and finance, including the funding levy and projection costs.

On service, he said the FOS should identify gaps between existing capabilities and what is needed for the future, then plan for continuous improvement to ensure that the quality of casework, including complex cases, is sufficiently robust and consistent.

Lloyds also recommended the FOS should review its investment in information technology and build consumer-facing technology that enables people to better manage their complaints.

It was also advised that strategic planning should be less top-down and “informed by a wide range of experience and expertise within the FOS”.

 

Up to the job

The Treasury Select Committee is to next week hold an evidence session on the FOS review.

Nicky Morgan, chair of the Treasury Committee, said: Trust in the FOS has been damaged.

“The report makes a series of recommendations for the board to consider in order to improve confidence in the quality of the FOS’ work, and in turn, in the financial services industry.

“The board must now demonstrate that they are up to this job.

“The committee will scrutinise the report in detail when it takes evidence from Mr Lloyd and the chief executive and chair of FOS next week.”

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