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Want to make a financial complaint? FOS, FCA, OFT, MoJ? Argh!

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Profile photo of Martyn Saville Martyn Saville
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If you want to complain about a financial services provider, there’s a bewildering array of regulators and industry bodies to choose from. From the FSA to the FLA and OFT; it’s an absolute alphabet soup of acronyms.

Isn’t it about time we were given a clear route to seek redress, with a powerful financial regulator that steps in before things go wrong?

Here’s a relatively simple example to show just how complicated things can get. Imagine I’ve chosen to use a claims management company (CMC) to put in a claim relating to mis-sold credit card payment protection insurance (PPI). The question is: ‘Who polices this market?’

Well, CMCs are regulated by the Ministry of Justice (MoJ), while credit card providers come under the Office of Fair Trading (OFT) and the Lending Standards Board. Oh, and PPI is within the Financial Services Authority’s remit. And then there are trade bodies and the companies themselves. If I want to pursue a complaint further, there’s the Financial Ombudsman Service (FOS). It’s all too confusing.

This spreads into day-to-day banking as well. If my bank account is in credit, it’s regulated by the FSA, but if I’m in the red, the OFT and the Lending Standards Board get involved too.

Financial complaint confusion – what’s the answer?

The first step towards a solution is to bring the OFT’s consumer credit powers into the remit of the FSA’s replacement – the Financial Conduct Authority (FCA).

We need one strong regulator for all credit firms, from overdrafts to payday loans to debt management companies. A well-resourced and powerful regulator could bring about real change, including the ability to ban harmful products altogether.

A government consultation last year considered the merits of transferring responsibility for consumer credit regulation to the FCA. At the start of the consultation the government said:

‘Transferring consumer credit regulation from the OFT to the FCA provides an opportunity to significantly improve the way consumer credit is regulated and to create a simpler, more responsive regime.’

The good news is that the government has now announced that it’s going to do just this. But we want this change in regulation to go further and genuinely improve consumer protection. The FCA needs to be given the powers that will make it a truly strong regulator – or a Watchdog, not a Lapdog.

Until this happens, too many of us will give up in frustration when we try to submit a complaint. And questionable industry practices will continue to slip through the gaps – gaps that a strong regulator would have the power to close.

What powers do you think the new regulator should have? And which parts of the financial services industry should it sort out first?

Comments
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frugal ways says:
12 March 2012

Until the regulation is changed from the Hampton principles, it matters not one jot what a regulator is called, which areas they cover, etc.
If a regulator or enforcement body’s actions are deemed to be of detriment to the business, they will not act, as by law they have to consider the “economic needs of the business” before they can act in the interests of the consumer.

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Nikki Turner says:
12 March 2012

As things stand (and have stood for a long time), the oxymoron of regulators having to consider “consumer protection” vs “market confidence” has made a mockery of any chance of a legitimate hearing for a legitimate complaint. Market confidence wins hands down every time and this has allowed serious irregularities, not to mention criminal activity, to go unchecked and unpunished repeatedly.

The myth that retaining market confidence will improve the economy, has a lot to answer for as it has merely allowed a lot of naked Emperors to parade about and pontificate while feathering their nests and destroying the social structure of the country. And all the horror stories of how our financial sector was really running amok, are now coming out anyway. For example the stunning report the FSA released about HBOS last week. But why has it taken so long for the regulators to come clean about what was happening in the banks? The answers can only be a) the regulation was inadequate and negligent b) the banks have been able to lie with impunity to the regulator or c) Government restraints on the regulators to protect their own interests have meant any regulation of real significance was curtailed and reduced until it became as effectual as a limp lettuce leaf. I suspect it’s a bit of all three scenarios. And I can’t see that moving the chairs around on the Titanic is going to change that – what ever new acronym we have.

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ArgonautoftheSeas says:
12 March 2012

From experience personally encountered as to an ombudsman
service adverse decision -argh!- shall now go straight to the
law every time but make sure have a strong legal case.
BTW that same case I lost shall now go to the
Court that shd have been done in the first place and what a
complete waste of time I’d suffered!

Anything the subject of a (serious) dispute is best dealt with by
a court of law and don’t settle for anything less like mediation.

Best to get a definitive decision in the first place in Court
subject to a possible appeal thereafter.

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M. says:
12 March 2012

Am I paranoid, or is the reason we have to jump through hoops and complain via these gov’ manufactured bodies is to prevent going to law for redress.

It seem that these bodies are incorporated under the guise of consumer protection, but are actually there to prevent these companies being brought to book for there own bad behaviour.

In how many instances could a judge make a simple determination based on the evidence before him, instead we have to follow these long, complex, procedures which tend to fail us in the end.

I for one absolutely refuse to follow these ‘guidelines’ as once you start these procedures you have entered into an agreement to abide by their determinations and have surrendered your rights to seek a judgement under the law. Despite all the hype about these bodies and the general consensus that you must follow this path to seek redress, there is absolutely nothing the government can do to prevent you bypassing these ‘bodies’ and taking legal action against those who have wronged you.
Except of course the mega legal bill if you lose 🙂

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ArgonautoftheSeas says:
12 March 2012

I qualified what I said as to there being a strong legal case
and taking possibly Counsel’s opinion beforehand.

Anything falling within ‘small claims’ risks very
little or nothing in way of costs incurred of other side
on losing.

Yup….2012 and 2013 will be years of great change
for civil litigation in England and Wales.

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M. says:
12 March 2012

Argonautof theSeas
Be nice if you could persuade Which to publish the outcome: Might get the ball rolling.

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frugal ways says:
12 March 2012

It is not only redress via an enforcement body that is failing, regulation or lack of, is causing “Rip off Britain” syndrome.
One look at the ONS figures on energy prices for the consumer, shows clearly that the Hampton report is published and accepted in full by the then government coincides with consumer bills shooting up and continuing to do so, confusing billing practices, etc.

What disturbs me more is that there tends to be a closed shop as regards regulators and enforcement bodies.
They will happily answer a business question, yet when a consumer asks a basic, non business sensitive question, they meet the request with ignorance.
What are regulators afraid of?

Look at the which? case with orange over their contracts – try asking OFCOM if orange continue to have a “compliant” status with the regulator – no answer.
Ironically, I don’t think the public have ever had a greater chance to have their say, yet are listened to/answered the least.
It is only going to get worse, with October 2011 white paper looking at ways for business openings being found within government departments and the information they have about all of us.

As regards the Financial Ombudsman Service – The FSA state cases should not be judged “with hindsight” (RBS failure report) but the FOS are openly using hindsight to explain bizarre judgements in favour of business.
The FSA have worded the HBOS and RBS report findings very differently, RBS report clearly shows that the “risk based assessment” approach failed completely and was deemed to be “flawed”
The HBOS report makes no mention of it.

Until government gets a grip of the problem, which will take a monumental effort to get them to open their eyes and see what’s happening in the real world, nothing about regulation/enforcement will change.
The only sensible option will be, as has been said, to take the matter to small claims and bypass government mediation. This will not help anyone as regards the damage being done through lack of regulation and ever increasing prices.

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Chris Hargreaves says:
26 March 2012

In Feb this year I won what is being discribed as a landmark ruling through the FOS which has resulted in becoming one of the hottest debates in the insurance industry. I fought for nearly three years winning 3 FOS decisions but my insurance company either ignored their advice or appealed. It took three attempts to get in a position where the company could not appeal and to be honest I have no complaints with the FOS. My complaint is the hoops you have to jump through to get to the point where you can complain because the insurer passes your information between departments delaying you getting answers. I would always suggest you have all the information you need before going to the FOS as in my case when I made my first complaint with the FOS the information held by my insurer was incorrect.

It took my nearly a year to get the correct information from the three hospitals and when I presented this to the FOS I was then told this information could not be used as it was not available to my insurer when turning down my claim but the FOS advised my insurer to look at my case again. As I was very ill during my second FOS claim I was advised that they could fast track my case which they did twice. Overall a stressful experience as I was no expert in how to get the information and what was best to give the FOS but they did keep me informed and were very understanding.

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