New measures announced today to modernise and transform the UK redress system include a change to the way the Financial Ombudsman Service (FOS) assesses complaints.
Previously, the FOS had a remit to resolve individual complaints based on what it thinks is “fair and reasonable in all the circumstances of the case”, but that degree of latitude meant it could interpret FCA’s rules and regulations – it did not have to accept the original intent of the rule nor method of compliance by the firm – rather, the FOS decided what should have happened in its opinion and would hold firms to that standard.
The effect was to generate uncertainty and risk for lenders because they could comply with FCA rules but still fall foul of the FOS’ interpretation of those rules.
The FOS announced today that their assessment would align with regulations, and the Government underlined this stance by also announcing today plans to legislate to ensure that, where firms have met their obligations under relevant FCA Rules, they must be found to have acted fairly and reasonably by the FOS.
Commenting on the news, Shanika Amarasekara, CEO of the Finance & Leasing Association, said:
“We have always thought it a fundamental point that lenders should be able to rely on compliance with the FCA’s rules to mitigate liability in complaints procedures.
“While extremely pleased that our discussions with all parties – the FOS, FCA and Government – have yielded this result, it is nonetheless disappointing how long the industry has had to deal with a quasi-regulator."
