According to the trade association, that under the current proposals there will be too many opportunities for the Ombudsman to ‘exercise subjective judgement’ for the reforms to be suitable for its role with financial advisers.
Wealth management trade association PIMFA has voiced concerns about the effectiveness of the Treasury’s proposed reforms for the Financial Ombudsman Service.
PIMFA called for further clarity from the Treasury in its response to the consultation on the proposed reform of the Ombudsman.
The Treasury's review seeks to ensure the Ombudsman continues to provide a fair, free, and accessible service for consumers while addressing long-standing industry concerns about consistency and alignment with FCA rules.
Whilst the trade association supported the principle that firms acting in compliance with FCA rules should be considered to have acted fairly and reasonably, it called for SIP 3.6.4. to be amended so the Ombudsman applies the rules rather than just taking them into account.
According to the trade association, that under the current proposals there will be too many opportunities for the Ombudsman to ‘exercise subjective judgement’ for the reforms to be suitable for its role with financial advisers.
Simon Harrington, head of public affairs at PIMFA, said: "Without further adjustment to the proposals – to ensure FOS gives full and balanced consideration to the evidence provided in all circumstances of any case – there remain too many opportunities for it to exercise subjective judgement.
“Whilst not a criticism, it is simply true that many FOS caseworkers are not qualified to the same standard as professional advisers, creating uncertainty about how technical evidence will be assessed consistently. This is particularly true in the case of assessing suitability.
“Under the proposed new rules, a firm could undertake an extensive, Consumer Duty-aligned assessment of the client’s attitude to risk and recommend a course of action understood and agreed. Yet, under the ‘fair and reasonable’ test, the FOS could still determine that the firm’s judgement was wrong based on a subjective view of the same evidence. This does not represent meaningful progress."
PIMFA said significant uncertainties still remain, particularly regarding the treatment of complex complaints, and addressing these issues will be crucial if the reforms are to be successful.
