How Fos decision publication will change complaint handling


    The establishment of a searchable database of decisions, similar to the Financial Conduct Authority’s database of Final Notices, will create a de facto system of precedent and make regulated firms even more nervous of Fos’ increasing power and influence.

    The idea of a decision database is not a new one; the significant change is the publication. In fact, the original Financial Services and Markets Act 2000, in Part 3A of Schedule 17, mentioned a register of decisions for the enforcement of Fos money awards. In addition, a former rule in the (then) FSA Handbook, dating from 2002, stated: “The Ombudsman must maintain a register of each money award and direction made.”


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    Despite provision for a register in the old legislation, it has taken over 10 years and recent substantial amendments to the FSMA for a searchable database to become a publicly available reality. In part this is due to industry concerns over the implications of such a database, which remain to this day.

    The quid pro quo for the rough justice administered by the Fos discharging its jurisdiction to decide (quickly and informally) what – in the opinion of the individual Ombudsman – is “fair and reasonable” in the circumstances of any case was that the process was confidential and without prejudice to the complainants’ legal rights. It was a form of alternative dispute resolution.

    The publication of decisions represents a significant step in the development of the Fos’ parallel jurisdiction: the more it looks and behaves like the courts in applying its own, non-legal jurisdiction, the more it displaces the courts and the common law from the financial services sector. This development is due, in part, to the toughening regulatory environment for regulated firms following the financial crisis; and, in part, it is a natural (and perhaps inadvertent) development given the Fos’ growing power and influence.

    When the Treasury consulted on the publication of Fos decisions, the proposals were met with a mixed industry reaction.

    Industry players – some more dutifully than others – welcomed the increased transparency about Fos’ decision making. Publication of final decisions is expected to help consumers, consumer groups and firms resolve complaints more quickly on the basis that a complaint is more likely to be resolved at an informal level if both parties can see how an Ombudsman might resolve it. It should also help prevent misguided or pointless complaints to the Ombudsman taking up valuable time and costing regulated firms more through case fees and the levy.

    Nonetheless, only one in every eight Fos complaints is determined by a final Ombudsman decision. The majority of Fos rulings are views expressed informally by adjudicators, and these will remain unpublished. The incentive for firms to settle at the adjudication stage is obvious: only those confident in their case or their regulatory and brand reputation will refer difficult cases to an Ombudsman for a final decision knowing it will be published.

    Despite the welcome benefits to be derived from increased transparency, there are new concerns about the manner in which the new publication policy has been implemented. It is unclear when the Ombudsman will exercise discretion against publication – for example, where a complaint is settled before a final decision is issued and accepted by the complainant. The sheer numbers of published cases – there will be thousands each year – render it impossible for anyone (let alone over-stretched firms’ compliance departments) to consider them all making it unclear how far firms must go in discharging their obligations under the rules to consider published guidance from the Fos and the regulator.