The Association of IFAs is calling for consumers to lodge a refundable deposit with the Financial Ombudsman Service to reduce the number of times when firms have to pay case fees.
In a report delivered to the House of Lords Select Committee on Regulators, AIFA points out the IFA community makes up only 14% of complaints received by the FOS and, of that 14%, more than 70% go in favour of the firm, but firms must always pay a case fee.
It states: “A proposal that would see consumers lodge a refundable deposit with FOS would be welcomed by the industry. If the case is found in the complainant’s favour, they would have the deposit returned (with interest).”
AIFA says the financial services community faces extra pressure from the FOS because it cannot rely on either a six-year limitations defence or a 15-year long-stop, which “poses significant questions around the quality of justice that firms may expect to receive”.
It also raises concerns about the Financial Services Authority’s intent not to be a retrospective regulator, saying that “even the best intentions can go awry”.
AIFA hopes its ‘stakes in the ground’ project, which maps out and records current industry practice, will give the regulator a trusted record of note to rely on when examining past practices.
The National Audit Office (NAO) is currently undertaking a study of the FSA, which AIFA says is a welcome move and suggests it should be a bi-annual exercise.
It adds: “FSA has recently published its plan and budget which sees a 10% increase in its fees (including a plan to spend £11m on IT investment). These figures are substantial and NAO scrutiny would help carry the industry’s support.”
The FSA has indicated the move towards a more principles-based regime will cost £50m and AIFA says a thorough cost-benefit analysis should be undertaken to ensure fair value is delivered.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7034 2680 or email [email protected].IFAonline
Annuity market worth £4bn in 2017
For ‘distress’ caused
Oversees £30bn of advised and D2C assets
Less than a third of top paid employees are women
£1bn business since inception