Financial Conduct Authority  

FCA told to review Fos oversight

FCA told to review Fos oversight

The financial regulator has been urged to review how it monitors the Financial Ombudsman Service and provide further information about its oversight of the service. 

In a decision published on its website last week the Complaints Commissioner ruled in favour of the Financial Conduct Authority in an allegation of "systemic failure" at the ombudsman, a service over which the regulator has an oversight role. 

The complainant claimed they had been "persecuted and discriminated against" by the Fos after making a complaint to the service and escalated their concerns to the complaints commissioner after the FCA did not uphold the complaint. 

According to the complainant "procedural irregularities, malpractice and service failings" existed at the ombudsman, for which they claimed the regulator was responsible. 

The FCA did not agree "systemic failings" existed at the ombudsman or that it was failing in its oversight of the service, and complaints commissioner Antony Townsend ultimately found the regulator had reasonably investigated the complaint. 

But Mr Townsend did suggest the FCA act on several points to improve its governance of the Fos. 

He said: "I do, however, suggest, that the FCA reviews its approach to monitoring and collating the information it receives about the performance of the Fos independently of the Fos’s own reports.

"As part of this review, I have suggested that the FCA’s regulatory affairs team and oversight committee should take note of the findings of the independent assessor and the information commissioner in your case as part of its general oversight function.

"I also suggest that the FCA develops a system whereby both the regulatory affairs team and oversight committee receive and review a regular summary of any complaints received about the FCA’s oversight of the Fos, to inform their work."

The commissioner also recommended the FCA, regardless of the review's outcome, provide further clarification on its website about its approach to its oversight of the Fos.

Mr Townsend said the FCA had accepted these suggestions, but the regulator declined to comment further when approached by FTAdviser

An independent review into the Fos carried out by Richard Lloyd in 2018 found no institutional bias against consumers but did raise concerns about the knowledge of some of the service's investigators. 

The review was launched after allegations made in the Channel 4 programme Dispatches that some decisions made by ombudsmen may have not been fair to consumers, but Mr Lloyd, who is now a non-executive director to the FCA board, said he could not find evidence to support some of these claims. 

Mr Townsend said: "I consider that the findings of this report were a relevant matter for the FCA to refer you to, since it demonstrated the FCA’s exercise of its oversight role, although I would also expect the FCA to continue to reach its own conclusions about the Fos’s performance over time."

The commissioner said it was "up to the FCA" how it interprets its statutory obligations but suggested the regulator's oversight committee should have an interest in "receiving, and collating, information about complaints involving the FCA's oversight of the Fos".