The Association of Professional Financial Advisers supports the government’s proposal to create a ‘small business appeals champion to challenge regulatory decisions, but has argued the remit of such a body should be widened to give a new way for firms to challenge ombudsman decisions.
In its response to the Department of Business, Innovation and Skills’ consultation on the appeals champions, Apfa said is supports the creation of the new body as it would empower small firms’ ability to challenge regulators.
At the end of March, the BIS department published a consultation which warned that evidence suggests businesses are not confident that where they believe the regulator has got it wrong they can challenge them effectively.
The consultation said “poor decisions are left to stand because businesses do not know how to challenge them, or because challenging them is simply too expensive or time-consuming”.
The consultation proposed addressing this by creating and appointing a series of small business appeals champions to scrutinise the way appeals and complaints are handled by national regulators, consider whether they are adequate, and make recommendations for improvements.
It said: “The outcome should be a powerful champion to drive reforms that give businesses - and particularly small businesses - access to understandable and effective appeals and complaints processes, freeing them up to grow, while reducing cost and confusion for both businesses and regulators.”
In its response, Apfa said while it supports this, it should be extended to include the Financial Ombudsman Service as although the ombudsman is not considered a regulator, it has significant powers as it can make financial advisers pay out as much as £150,000 in redress.
Chris Hannant, Apfa director general, said the trade body supports the creation of a small business appeals champion, “as too often small firms are put off questioning regulators because of the time and expense involved”.
He said: “This proposal should mean more small firms can get a proper hearing, which is a good thing.
“However, we think the appeals champion could and should be expanded to include ombudsmen as well as regulators. If you look at our sector, this proposal would apply to the FCA but not to Fos.
“Fos has the power to order firms to pay out as much as £150,000 in redress, which is a significant amount for smaller companies. And the difficulties smaller firms might encounter when trying to challenge a regulator’s decision can also occur when challenging an ombudsman.
The Fos’s powers are made even stronger as advisers are not privy to a long-stop, meaning they carry unlimited liabilities. In the Financial Conduct Authority’s latest business plan, the regulator revealed it would “consider the case for a 15-year time limit on complaints to Fos.
In May 2013, Apfa said it was going to renew its efforts to lobby for the introduction of a long-stop and has since continued to pressure the regulator on this.
