Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether her Department plans to maintain the Financial Ombudsman Service’s remit when considering complaints.

The Financial Ombudsman Service (FOS) plays an important role in providing consumers with a cost-free and quick route to resolve disputes with financial services firms.

My recent review of the FOS concluded that the framework in which it operates has resulted in it acting as a quasi-regulator in a small but significant minority of cases. That is why, as part of the Leeds Reforms, the Chancellor announced the most significant package of reforms to the FOS since its inception.

The review concluded that the ‘fair and reasonable’ test should be retained and adapted, to align it with the overall regulatory approach for financial services and provide greater predictability and consistency to consumers and firms. The government is currently consulting on proposed legislation to adapt the ‘fair and reasonable’ test to make clear that, where conduct complained of is in scope of FCA rules, compliance with those rules will mean that a firm has acted fairly and reasonably. It also proposes a mechanism for the FOS to refer a case to the FCA where there is ambiguity about FCA rules, to request a view on how its rules are intended to be applied, to ensure consistent application of regulatory standards by the FOS.

Regarding fraud, victims of fraud who wish to make a complaint about their financial services provider will continue to be able to bring complaints to the FOS, and the proposed changes to the legislative framework under which the FOS operates will not affect the FOS’s role in handling these complaints.