Treasury

Treasury Committee doubtful FOS is ready to handle SME cases




Nicky Morgan MP, chair of the Treasury committee, has written to the FCA to express the committee's doubt about whether the Financial Ombudsman Service (FOS) is ready to increase its remit.

At the beginning of the year, the regulator launched a consultation paper on plans to provide more access to the FOS for SMEs.

This would allow more SMEs to refer complaints to the FOS. 

However, following the Treasury committee’s evidence session with the FOS on the findings of its independent review, the committee has raised concerns about whether the FOS could handle the increase to its remit. 

"The FCA has proposed expanding SME access to the FOS from December this year,” claimed Morgan.

“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.”

Morgan has also written to Caroline Wayman, chief ombudsman and chief executive at the FOS. 

This was after Richard Lloyd, independent reviewer of FOS, recommended that the FOS conducted a review of its case work from the period at the beginning of its reorganisation in 2016.

However, Morgan has asked the FOS to reconsider its decision to appoint an experienced FOS ombudsmen and instead appoint someone sufficiently independent to conduct the review.

“In her evidence session with the committee, Ms Wayman rightly accepted the independent reviewer’s recommendation to review a sample of cases from the early stages of the FOS's reorganisation,” added Morgan.

“Unfortunately, she told the committee that this would be done in-house. 

“To help build consumer confidence in the FOS, the committee has requested Ms Wayman to reconsider this and appoint someone sufficiently independent to undertake the review."

Wayman replied to Morgan’s letter, stating that she agreed it would be helpful to secure independent verification of the audit, including the sample selection, the parameters of the checks, the results and the conclusions. 

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