Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent assessment he has made of the adequacy of the (a) framework and (b) processes for holding the financial ombudsman to account.

The Government believes that it is vitally important that the Financial Ombudsman Service (FOS) should be accountable for its performance and the quality of its work. The FOS answers to a board of directors, appointed by the Financial Conduct Authority (FCA) and must make a report each year on the discharge of its functions. The FCA’s appointment of the Chair of the FOS is subject to approval by the Treasury, on behalf of the Government.

The FOS’s accountability to Parliament consists of its duties to report to Parliament and Parliament’s ability to scrutinise, question and make recommendations to the FOS. Members of the board of the scheme operator which runs the FOS may be called to account in person before Parliamentary committees, including the Treasury Select Committee, and written Parliamentary questions on the FOS operations are passed directly to the FOS to respond.

The Government has taken steps to further enhance the FOS’s accountability to Parliament. Under new provisions in the Financial Services Act 2012, the FOS is required to lay its annual report and accounts before Parliament and made subject to statutory NAO audit, with the associated ability of the NAO to carry out detailed Value for Money Studies. This will ensure Parliament is in a better position to consider the efficiency, effectiveness and economy with which the FOS carries out its functions.