Financial advisers’ trade association the Association of Professional Financial Advisers (APFA) has called for authorised firms to be allowed to appeal Financial Ombudsman Service (FOS) decisions to an independent body.
At present, if a firm has a complaint upheld against them by an FOS adjudicator, then their only option is to appeal to an ombudsman at the FOS, i.e. another employee of the same organisation.
Writing on the Association’s website, APFA director general Chris Hannant said that “not only must justice be done, but it must be seen to be done.” He acknowledged the need for consumers to have access to a dispute resolution service that avoided the need to use the legal system, but suggested that the appeals process may not work in the interest of firms when he commented: “I think there is a problem in the close working of ombudsmen and adjudicators.”
Firms can appeal to an independent tribunal in the case of Financial Conduct Authority (FCA) enforcement decisions, and firms and consumers who make complaints about the FCA have access to an independent Complaints Commissioner. Mr Hannant appears to be calling for a similar body to be established to review FOS decisions.
Mr Hannant went on to say that he believes one of the reasons why some form of simplified advice process has not been established is a fear of how the FOS would handle a complaint about a sale made under the simplified process. “It is clear one of the primary obstacles is the fear, in the event of a complaint, that the service would be treated as if it was a full advice service by FOS,” said Mr Hannant.
APFA made its call for an independent appeals process as part of its evidence to the Government’s Financial Advice Market Review – a comprehensive review of the advice market and the barriers preventing widespread public access to financial advice.
Mr Hannan’s comments are similar to those made in a recent speech by APFA chairman Lord Deben (the former MP John Gummer) who said firms should be able to appeal FOS adjudications to judges.
According to a recent interview given by Caroline Mitchell, the lead ombudsman at the FOS, the uphold rate for financial advisers was just 40% in the last full financial year, below the uphold rate of for all cases considered by the Service. However, many advisers can cite examples of individual cases where they believe the FOS has unfairly sided with the client. One of the advisers’ frustrations is that the FOS can make general judgements about whether the firm’s conduct was ‘fair and reasonable’, and can thus find against a firm even if they did not actually break any of the FCA’s rules.
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