The Financial Ombudsman Service is becoming a policy making body in its own right and the FSA is cre...
The Financial Ombudsman Service is becoming a policy making body in its own right and the FSA is creating problems because of failures in the way its duties are defined by the FSMA 2000, according to criticisms from APCIMS-EASD in its response to the Treasury's N2 review.
The Association of Private Client Investment Managers and Stockbrokers-European Association of Securities Dealers' chief criticism of the ombudsman service's current role is that the rules defining its operations mean it is intent on interpreting FSA rules rather than applying them.
"There is some disquiet about the role of the FOS and firms question whether it is an arbitration service or a consumer champion," APCIMS-EASD says.
As evidence of weakness in the FSMA 2000 on the role of the FOS, it points to the lack of a right to appeal for regulated firms, the existence of parallel considerations of issues by both the FOS and FSA - such as split capital investment trusts - and the lack of power to force complainants to stop making repeated complaints against the same firm.
As to the FSA, APCIMS-EASD says the weaknesses of the FSMA 2000 mean that the regulator is guilty of multiple failures.
These include failing to give enough guidance to regulated firms, not distinguishing between firms providing goods or services, treating smaller firms with "remoteness", pursuing too many consultations, and not properly calculating the true costs of regulatory changes, the association says.
"APCIMS believes that, whilst there is much to commend the Act, there are areas where changes are needed to help the regime to operate more smoothly and fairly," it say in the response document.
Elsewhere it adds: "Some firms have questioned whether the complexity of the FSA's regulatory regime is a function of the detail and complexity of the ACT and its attendant secondary legislation or whether the FSA is responsible for the current difficulties which many have in struggling to understand their obligations.
And: "The post N2 regulatory regime has highlighted flaws in the 'one size fits all' approach. Whilst the introduction of a single regulator has much to commend it, in practice, our firms are experiencing some significant problems in the FSA's approach which stems from the Act."
APCIMS-EASD says it wants the FSA to adopt a fifth objective to the four that currently define its operations: this additional consideration would be the "health and efficiency of the UK financial system".
"Firms and their clients will better understand why action is or is not taken by the FSA if the test is the health and efficiency of the UK financial system than is the case currently where the test is against the regulators objectives."
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till