Financial regulators sign deal to ensure fair compensation

Financial regulators sign deal to ensure fair compensation

The UK's financial regulatory bodies have agreed to collaborate on matters of common interest and ensure fair compensation for consumers.

The Financial Ombudsman Service, Financial Conduct Authority (FCA), Financial Services Compensation Scheme (FSCS), The Pensions Regulator (TPR) and the Money and Pensions Service (Maps) published a formal agreement yesterday (January 25) called the Wider Implications Framework.

It sets out how members will collaborate to achieve a better outcome for consumers, small businesses and the financial services industry.

The regulators said the strategy built on collaboration already in place and will give greater transparency for wider stakeholders.

Nausicaa Delfas, interim chief executive and chief ombudsman at the Fos, said: “The Wider Implications Framework is a significant step forward. The framework formalises existing collaboration among members on matters of common interest and will give greater transparency to wider stakeholders.” 

The framework will consider opportunities or risks where activities by financial services firms could give rise to common interest questions and consider how members collectively might best respond.

Activities by one or more of the members that could have an impact on the activities of another member will also be considered such as supervisory action by the regulators, or other activities such as trends or issues in the Fos’ or FSCS’s casework.

In considering whether to take action the regulators will consider: the number of consumers affected, amount of potential loss/redress owed, risk of firm failure, where relevant, extent of alignment between relevant members in their understanding of and approach to the issue, and wider regulatory action under contemplation.

The Fos said it wants the framework to ensure that issues are considered by members in a timely manner.

It hopes this will provide recognition to the wider impact of issues facing consumers and small businesses, such as the need to be quickly and fairly compensated for detriment caused by firms.

The framework will be overseen by a group currently chaired by the Fos and will rotate on a 12-month basis between its members .

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