Instead, PIMFA has suggested reforms which would both improve the current approach to mass redress events as well as strengthen the regulator’s oversight of the complaints process.
Where these mass redress events occur, PIMFA believes that there is scope in resetting the boundaries around how the Financial Ombudsman Service (FOS) operates and, crucially, about what it does not do, which would likely significantly reduce the operational pressure on the FOS.
Consequently, PIMFA believes that in the case of mass redress events, and where firm-led solutions have been agreed in dialogue with the FCA and/or a Skilled Person, the FOS should only follow on from the agreed redress programme outcome - acting as a final backstop to consider if the programme parameters have not been fulfilled where the customer remains unhappy with the outcome.
Beyond the scope of mass redress events, the trade body also outlined how the FCA and government should consider consolidating the disparate regulatory regimes governing CMCs to overcome that the current regulatory arbitrage with the two primary regulatory regimes. This would result in more consistent experiences for consumers and better regulation of the CMC sector more generally. PIMFA would favour the FCA having powers over all financial services focused CMCs rather than the current regime which provides for some Solicitors Regulation Authority (SRA) regulated ‘professional representatives to bring forward financial services claims.
Simon Harrington, Head of Public Affairs at PIMFA, commented: “Ensuring that we have a fit for purpose redress system when things go wrong on a major scale is an important step in ensuring that consumers who have been let down receive a fair outcome. Whilst we think that it is right that the FCA have identified some areas for reform – specifically the need to identify when a mass redress event has occurred, we also believe there is scope for them to be more ambitious and assertive in their proposals.”
“We strongly believe that the FCA should give consideration to the role of the FOS and how it currently involves itself in mass redress events, and where they have worked closely with firms and/or a Skilled Person to identify and resolve any failings, the FOS should be out of scope, giving firms the breathing space they need to meet their redress obligations.
Only once a consumer has received and understood an offer of redress, do we believe that the FOS should be in scope to ensure the process is as efficient as possible and that consumers who have been let down do not inadvertently find themselves further delayed by process and bureaucracy.”
“We would also strongly urge the FCA to look beyond the crystallisation of mass redress events and consider the regulatory regime which governs complaints more broadly. To this end, we strongly believe that there is scope for the FCA, in consultation with government, to consolidate the regulatory regimes which currently governs the CMC sector. It is vital that there is consistency of consumer experience, and most pressingly, consistency of standards across the board and this can only be achieved through a consolidated regulatory regime.”
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