The Financial Ombudsman Service has plans to persuade financial advisory firms to get involved in the consumer complaints process at an earlier stage than usually seen, in response to calls for an appeal on ombudsmans' decisions.
Details of the FSA and FOS responses to CP04/12 – which looked at how the Financial Services and Markets Act is performing after two years in use, and its relation to the FOS – have yet to be compiled and published as both authorities and the Treasury are still scratching out its reponse to industry feedback.
However, initial indicators suggest the FOS may try to do more to highlight its existing four-step complaints handling process, as most advisers choose not to interject their side of the argument until the final decision is made, when they no longer have a position from which to make their case.
Under current rules, the FOS has a four-step process – provisional decision, adjudication, conciliation and final decision - which the ombudsman follows in any dispute and which should allow both client, adviser and provider (if necessary) the opportunity to present their case.
Officials hope they can find a way of persuading adviser firms to get involved in that process much earlier and see if the matter can be resolved at least at adjudication or conciliation, as some IFAs ignore all correspondence with the FOS until the final decision stage and then have no further position they can take to argue a case once it reaches final decision.
The CP04/12 consultation published in July 2004 questioned whether there were sufficient grounds for some form of appeals process to any FOS decision, as the FSA document recognised current rules could be in breach of the European Convention on Human Rights.
Since then, there have heated responses from some financial intermediaries arguing there should some form of appeals process to meet the individual’s human rights.
That said, the only professional or trade body to argue there should be an appeals process in relation to FOS decisions is APCIMS, as both the LIA and the AIFA argued there was a significant cost to providing an appeals process and is therefore unlikely to be beneficial to the industry.
Official figures from the FOS reveal only 8% of disputes with IFAs ever get as far as the ombudsman’s final decision, and many of those only do so because the IFA firm either has not responded to any correspondence from the FOS or has refused to comment.
Any new intermediary who has never had a complaint made against them before will also be sent a leaflet explaining how the process works and which tries to encourage earlier conciliation.IFAonline
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