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The UK’s monetary ombudsman might be overhauled to cease it appearing like “a quasi-regulator”, the Metropolis minister mentioned on Thursday, opening the door to the potential introduction of a brand new enchantment course of for firms to problem its selections.
Emma Reynolds mentioned the conclusions of a evaluation she was main into the Monetary Ombudsman Service could be introduced subsequent month as a important a part of the federal government’s monetary companies technique.
A plan being thought-about as a part of the evaluation is at hand higher management over the FOS to the Monetary Conduct Authority by giving firms the flexibility to enchantment to the watchdog when ombudsman selections go towards them, based on individuals briefed on the matter.
“The FOS, in fact, performs an essential function in offering customers and corporations with simple, impartial dispute decision, which is important,” Reynolds advised TheCityUK convention in London on Thursday.
“But it surely can not, and it shouldn’t act as a quasi-regulator. Adjustments are wanted to supply higher predictability and clearer expectations on redress for all events.”
The proposed transfer to curb the powers of the FOS is a part of a wider ministerial push to spice up financial progress by easing regulation. It follows the federal government’s selections to axe the UK funds watchdog in March and to oust the chair of the competitors regulator in January.
Scrutiny of the FOS has intensified after its rulings in favour of UK customers complaining about alleged mis-selling of automobile finance, which threatens to turn into one of many nation’s greatest monetary scandals, costing lenders as a lot as £44bn in redress.
Chancellor Rachel Reeves mentioned final 12 months that the connection between the FOS and FCA could be reformed to enhance how they dealt with “historic market follow and mass redress occasions”.
The ombudsman is already enduring a interval of upheaval after Abby Thomas abruptly resigned as its chief govt in February with a everlasting alternative nonetheless to be discovered, with its chair Baroness Zahida Manzoor additionally planning to go away in August.
Whereas the FCA appoints the ombudsman’s board, the FOS has vital leeway to make its personal selections on the greater than 200,000 instances a 12 months which are referred to it by people who find themselves sad with how their grievance has been handled by their monetary companies supplier.
Permitting firms to problem a FOS choice that they imagine contradicts FCA guidelines by referring it to the watchdog would considerably undermine its independence.
“We agree that now, after 25 years of operation, marks a well timed alternative to evaluation the system as a complete,” the FOS mentioned. “That’s the reason we’re working intently with the FCA and HM Treasury to make sure the system — together with the very important function our service performs inside it — is match for the long run.”
Reeves plans to set out a monetary companies technique at her set-piece Mansion Home speech within the Metropolis to be held on July 15.
Nikhil Rathi, chief govt of the FCA, advised TheCityUK convention that it had made practically 50 proposals in response to the request by Prime Minister Sir Keir Starmer for it to do extra to assist progress and competitiveness.
“Extra is coming,” Rathi mentioned, including it could quickly launch a session on “lowering frictions in securitisations” in addition to on reforming itemizing prospectus guidelines to make it simpler for firms to lift capital.
Rathi additionally mentioned an announcement was “imminent” on how the FCA would reform the foundations round monetary recommendation to make it simpler for firms to supply steerage to customers on make investments with out being topic to onerous rules.
