Skip to main content

Ombudsman's review “will do little to help restore public confidence in the FOS

18 October 2018

The Financial Ombudsman Service (FOS) will conduct a review of cases made during the early stages of its reorganisation in 2016.

Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, has written previously to Caroline Wayman, Chief Ombudsman and Chief Executive of the FOS, to set out the Committee's expectations of the review.

Ms Wayman wrote to Mrs Morgan last month with details of the FOS' “finalised” plans for the review. The first stage will comprise a sample review exercise to check against the relevant controls and standards, which will be undertaken by Deloitte.

The second stage will comprise a further review of any case found not to have been handled in accordance with the FOS' controls and standards to examine the outcome, which will be undertaken by Carol Brady MBE.

Chair's comments

Mrs Morgan has today responded to Ms Wayman to express the Committee's concerns about the review. Commenting on the correspondence, Mrs Morgan said:

“Many people have contacted the Committee with concerns that the FOS has failed to act with due diligence in their cases. To ensure that the public can have full confidence in the FOS' review, and the FOS itself, it must properly asses case outcomes, as well as process.

“In its current form, the review places too much emphasis on process. Whilst all the correct boxes may have been ticked when a case was being processed, it doesn't necessarily mean that a correct case decision was then made.

“It's also concerning that cases will be tested against the ‘Wednesbury reasonable test', that is, the ombudsman's decision would have to be considered irrational as well as unreasonable. This is an extremely high bar as decisions can be poor without necessarily being Wednesbury unreasonable.

“In its current form, the review will do little to help restore public confidence in the FOS.”

On the Financial Conduct Authority's (FCA) announcement that small businesses will gain access to the FOS, Mrs Morgan said:

“The timeline originally proposed by the FCA for increasing the FOS' remit was ambitious and, ultimately, risky. It is right that the FCA has listened to the Committee's concerns and revised its approach. The Committee will examine the appropriateness of this new timeline when it publishes its report on SME finance shortly.”

Further information

Image: iStockphoto