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The Association of Independent Financial Advisers has criticised the Lord Hunt’s review into the Financial Ombudsman Service and said it shoud go much further and be "more comprehensive".

The association said that Fos should of introduced oral hearings, but added that the review acknowledged the differences faced between large and small firms.

Chris Cummings, director general of Aifa, said: "We welcome the recommendation that the Small Firms Taskforce must do much more to support small businesses. The report also emphasises the need for the entire Ombudsman organisation to be sensitive to the particular needs of small businesses and expand its team to include external representatives from this area. This clearly acknowledges the differences faced between large and small firms.

"We believe that Lord Hunt should have accepted our calls for the introduction of oral hearings. The lesser step of a pilot of facilitated meetings in the early stages of complaints is welcome as it shall be used to test the difference a hearing makes. The decision to introduce oral hearings should be reconsidered at the end of the pilot."

Aifa added that clients of IFAs should be aware that Fos is an arbitration service and should not be called a Financial Complaints Service.

Mr Cummings added: "Consumers should only refer to Fos if they have failed to reach agreement with the firm involved. Miscommunication of this point could result in the ombudsman being inundated with complaints, which they then have to refer back to the correct course of action.

"The Hunt Review has highlighted many areas where Fos needs to improve its operations. Many of these have a cost impact and we would expect any proposal to increase fees for our members to be subject to a full cost benefit analysis."