According to the Financial Conduct Authority and HM Treasury’s Financial Advice Market Review final report there is “more that can be done to help improve the transparency of the Financial Ombudsman Service’s process and outcomes”.
The Financial Ombudsman Service has been given four key recommendations in the FAMR report, published today (14 March).
During the Financial Advice Market Review, a number of firms raised concerns about how Fos operates, including the fact that decisions made by the ombudsman may contribute to nervousness by firms about delivering advice.
Moreover, there were concerns about a risk of inconsistency in decisions, alongside a concern that cases will be judged according to standards applicable at the time of a complaint, as opposed to the time of advice.
The four recommendations made by HM Treasury and the FCA’s report for the Fos are:
• The Fos should consider undertaking regular ‘Best Practice’ roundtables with industry and trade bodies;
• The Fos should publish additional data on its uphold rates;
• The Fos should consider whether to establish a more visible central area for firms on its website by summer 2016;
• The report of the Fos’s appointed independent assessor should be expanded.
The FAMR report also noted that the FCA is to conduct a review of how the FSCS is funded in 2016.
The FAMR report recommended this review should explore risk-based levies, reforming the FSCS funding classes and whether contributions from firms could be smoothed by making more extensive use of the credit facility available to FSCS.
It stated reforming the funding classes to better distribute the FSCS levy among members of the intermediation funding classes was one option, while a risk-based levy system is a practical and a cost effective way to reflect the risk a firm poses to the FSCS.
FAMR recommended that following the review of FSCS funding, and in light of the evidence from that review, the FCA should consider whether there is a case to look further at the professional indemnity insurance market.
This would be in relation to the suitability and availability of cover for smaller advice firms.