The Financial Ombudsman Service is in need of structural reform and the government should in particular consider introducing a tribunal based on the rule of law, experts claimed last night during a debate in Westminster.
At a debate at Portculis House called by Nic Dakin MP, Labour MP for Scunthorpe, City barrister Peter Hamilton of London-based law firm Pump Court chambers submitted a paper proposing radical reform of the service that would see Fos forced to submit to a legally-binding tribunal when handling complaints.
Speaking at a meeting on how to combat the growing threat of claims management companies, Mr Hamilton said the concern over third parties was actually a symptom of the lack of balance in a system that offers no recourse to appeal against Fos decisions.
He said: “The Fos is in need of structural reform, and is in contravention of the European Convention of Human Rights.”
The meeting was held to discuss the rising threat of claims management companies to the financial services industry and was attended by IFAs, MPs, trade bodies and financial services providers.
Mr Dakin has been an outspoken critic of Fos after taking up the concerns of financial adviser constituents that vexatious complaints brought by CMCs.
In March he told the Commons chamber one of his constituents, Ian Broadbent, director of Blue Sky Mortgages, has had to respond to a “continuous stream of vexatious claims” from CMCs on behalf of clients who have never been sold payment protection insurance by his business.
Mr Dakin highlighted that Mr Broadbent had been forced by Fos to consider a complaint from a client who had earlier admitted to not recalling a sales process but later re-submitted the claim via a CMC, which said that the client had a “clear recollection of the sales process”.
He said: “That was not considered a vexatious complaint and it is being considered by the Fos... That will not strike anyone as a sensible, fair or efficient way to proceed.”
Fos has hit back at claims that it is inundated with vexatious claims from CMCs, stating that only 1 per cent of non-PPI claims from third parties are considered spurious and that advisers are the subject of as many complaints from peers as they are from claims companies.
Publishing the findings of a survey in March, Fos rejected demands from a recent survey to begin charging “chancers” that raise frivolous claims, Fos stated that it had decided against charging either consumers or CMCs as it believes “it would be consumers who would ultimately bear the cost”.
“Though we’ve thought hard about the option of charging claims management companies to bring complaints to us, we don’t believe this would address any of the controversy surrounding that sector – or prevent “mass complaints” at source.”
