A review of the FOS is long overdue, says Merricks
By David Worsfold
Walter Merricks, chief ombudsman, told members of the All Party Parliamentary Group on Insurance & Financial Services that the review of the Financial Ombudsman Service (FOS) - currently being carried out by Lord Hunt - was long overdue.
Due to the huge burden of dealing with the mortgage endowment mis-selling crisis, which hit the FOS just after it was established, it never had a chance to properly consider how a statutory body should adapt the voluntary schemes it was founded on: "We now have the opportunity to draw breath and review some of the key features of the service now it is a public body".
Top of the agenda for the Hunt review are transparency and accessibility, and Merricks explained why: "Should we put more information in the public domain? This could be controversial, which is why we haven't just gone off and done it". It needs wide consultation about how far and how fast, he added.
Part of the background to the review is the Financial Services Authority's (FSA) move to principles-based regulation, which could see the FOS becoming a "pseudo regulator" if it focuses too much on regulatory compliance, warned Merricks.
In a separate hearing, however, industry experts argued that consumers would be better off if the FOS acted like a pseudo regulator and warned the FSA of any potential problems. Kevin Carr, head of protection strategy at LifeSearch, called for the FOS to be more pro-active in flagging up potential market abuse and mis-selling.
The British Bankers Association (BBA) chief executive, Angela Knight, echoed Carr's plea: "The wider implications process has been immensely disappointing as far as the industry is concerned," she said, adding that the BBA had expected to see a more discursive process involving the FOS, FSA and industry to sort out potential problems before they got out of hand.
