In Depth: Is Fos going to become a ‘quasi-regulator’?

The Financial Ombudsman Service recently called for feedback on a series of proposed changes to policy, which could see the service publish all its final decisions including the names of the firms involved - but not the individual consumers.

More than fifty of the biggest industry product providers responded at length, describing which points they agreed with and which they could not support. The comments made for interesting reading.

Two predictable concerns voiced by the larger companies were the potential damage done to a firm’s reputation as a consequence of publication, and the potential for abuse by opportunistic complaints companies and ‘ambulance chasing’ media.

However, respondents also highlighted a range of other, more subtle, unintedned consequences.

Naming and shaming

In its response to the proposals, a spokesperson for Aegon said that the move could cause undue reputational damage for “companies having a genuine dispute”as they will “continue defending their position”, while companies with “bad practices” would be more likely to slip below the radar by settling.

Prudential echoed this concern in more general terms, saying that it did not “understand” why “the identity of the financial business is central to the issue in question or that this is a justifiable argument”.

The firm said instead that the focus “should be aligned more to the product being complained about and not the individual business, which may be viewed more as a naming and shaming exercise.”

This goes hand-in-hand with the common argument that publication of firm names will be damaging to reputations regardless of the Ombudsman’s decision; that a brand can be tarnished simply by the fact of having been subject to a complaint, even if it is rejected.

Prudential did not stop there, saying that the threat of publication could in itself be a tool for the Ombudsman.

Prudential said in its response: “There is a danger that Fos adjudicators may use the publication of final decisions as a tool to get firms’ acceptance, otherwise taking the consequence of publication of a final decision.

“This may be viewed as driving firms to be more acceptable to adjudicators’ decisions.”

Ambulance chasers

Beyond the simply issue of the direct effects for companies that are subject to complaints, respondant companies were similarly universal in their concern that publication of final decisions could encourage a ‘scattergun approach’ from opportunistic complaints companies.

Such firms, which already account for half of all cases brought to the Ombudsman, could, some firms suggested, give both companies and the service itself a huge amount of additional work to wade through.