The Association of Professional Financial Advisers’ second response to the Financial Advice Market Review has called for a fundamental reform of the Financial Ombudsman Service.
The trade body said that the advice sector needs to have greater confidence in the way the Fos handles complaints, addressing concerns relating to “the lack of clarity as to processes and procedures, inconsistency of decisions, lack of training of adjudicators and a bias towards complainants”.
Apfa said that firms structure their businesses in order to manage liabilities, rather than being open to more innovative ways of providing advice reform.
“Reform of Fos is necessary to ensure that it is a fair process that follows legal principles. It should be impartial and fair at every stage, including having an independent appeal procedure,” the response read.
It explained that any simplified advice solution would require reform of the Fos, adding that if advice firms knew the extent of their potential liability, they would have more confidence to develop such models.
“There therefore needs to be certainty as to Fos’s approach regarding simplified processes. At the moment, advice firms are afraid of being judged as providing a different service, i.e. if they are offering a simplified service, being judged as offering a full advice service.”
Apfa said that the simple solution to this would be providing a properly independent appeals process to a body that is independent of the Fos.
It added that the Financial Conduct Authority itself separates appeals in their enforcement procedures with the regulatory decisions committee and the Upper Tribunal.
Chris Hannant, director general of Apfa, commented that firms need more confidence in how they will be treated at Fos. “I believe this can be addressed by providing a properly independent appeals process that is independent of Fos.
“Advisers can make a difference – I would urge all advisers to think about what needs to change and respond to the review. We’ll be sending material to members to help them respond, but it is important that you tell them about the things that affect your business.”
Last month, Apfa chairman John Gummer argued at its annual dinner that there should be a change to the way ombudsmen operate, pointing out the need for advisers to be able to appeal cases to a judge.
ruth.gillbe@ft.com
