The Treasury Select Committee has been taking evidence on the Independent Review of the Financial Ombudsman Service (FOS) to determine whether expanding the remit of the FOS will provide SME customers with an effective and quality service. However, the Chair of the Treasury Select Committee, the Rt Hon Nicky Morgan MP, has today written to the FCA, who are consulting on the proposals to expand the remit of the FOS, to express her doubts over the ability of the organisation to adapt quickly to the challenges faced by an expanded remit.
Ms Morgan Said: “The Committee is doubtful as to whether the FOS is ready for an increase in its remit within the FCA’s timeline…The proposals should not be pursued at the expense of sound decision making and appropriate training and recruitment at the FOS. The already-damaged public confidence in the FOS will be damaged even further if these changes are rushed through”.
The APPG on Fair Business Banking concurs with the view of the Treasury Select Committee as we have a fundamental lack of confidence in the ability of the FOS to quickly expand both their operational capacity and the knowledge required to sufficiently deal with increased numbers of complex SME cases. In the short-term, we believe that they will not be able to balance the challenges required from the expansion to their remit with the extensive restructuring the organisation is set to go through in the near future to deal with the large declines in PPI cases. The expanded remit of the FOS would therefore push the organisation to its limit, which is not an acceptable prospect for any customer.
However, the APPG on Fair Business Banking has further doubts over the long-term ability of the FOS to adequately deal with disputes between SMEs and their financial services providers. Simply expanding the remit of the FOS alone will still leave many SME customers left only with the courts as a suitable mechanism for redress, which is financially unattainable for many SMEs. Furthermore, the FOS will still lack the powers of a court, meaning that they cannot force the disclosure of information or compel witnesses to give evidence.
What is clear is that critical decisions must be taken soon to ensure that we get to the right solution for SME customers. The problem cannot simply be kicked down the road. Ms Morgan’s comments strengthen the position of the APPG, who believe there to be a fundamental lack of confidence in the ability of alternative dispute mechanisms to adequately resolve financial services disputes. With each day that passes, more and more people are being denied access to justice. It is time for action. This is why we have campaigned, and will continue to campaign for the establishment of an Independent Financial Services Tribunal to resolve disputes with financial services providers. This is required not simply to deal with cases that are occurring now, but also to address instances of historic banking abuses which go back many years, which have already gone to FOS, many of which are unresolved today.
