An independent review has called for the Financial Ombudsman Service (FOS) to become more open.
Lord Hunt of Wirral said in his report on the FOS, which settles disputes between consumers and financial services firms, that there should be greater openness in the ombudsman’s approach to cases and the relationship between him and the regulatory system.
He also suggested that more information should be published on the performance of individual financial services companies’ handling of customer complaints.
The report, which followed a six-month review, set out a total of 73 recommendations, generally aimed at making the service more transparent and accessible.
These recommendations included increasing spending on television advertising and consumer campaigns to raise people’s awareness of the scheme, and replacing the name ombudsman with something more consumer friendly.
It was also suggested that the service should have a freephone number rather than the current subsidised 0845 one and its opening hours should be extended.
Case advisers should also be appointed to guide the most vulnerable consumers through the complaints handling process.
In a bid to increase the transparency of the service, Lord Hunt said all communication with the regulator should be placed on the public record, while comprehensive information on all aspects of the ombudsman’s policies should also be published.
He also suggested launching an awards scheme to identify and reward businesses who handled complaints well, matched by a ‘wooden spoon’ for the worst performers.
Claims management firms
He added that there needed to be closer monitoring and regulation of claims management firms, which pursue compensation claims, particularly relating to endowment mortgages, on behalf of consumers.
But the report concluded that the ombudsman’s current approach to settling disputes on the basis of ‘what is fair and reasonable’ was essential to underpin the service’s credibility as an alternative to the courts.
Lord Hunt added that there was ‘no convincing case’ for an external appeals process to be set up.
He also found that charging consumers to access the service would damage accessibility.
Doug Taylor, personal finance campaigner at Which?, said: ‘It is great news that the review has agreed that FOS should remain free to consumers. Introducing charges would inevitably discourage some people from using the service, particularly those in financial hardship.
‘We also agree that a time-consuming and expensive appeals process would only mimic the courts – it’s very important that the service remains a quick form of consumer redress.
‘FOS is the unsung hero of UK financial services regulation and helps to maintain consumer confidence in the industry.’
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