In her first Mansion House speech as chancellor, Rachel Reeves announced proposed changes to the Financial Ombudsman Service, including establishing clearer expectations on how they cooperate with the FCA.
The proposed changes to streamline the Ombudsman process will be widely welcomed in the industry. A robust and efficient consumer redress structure is key, but it is fair to say that the lack of predictability of Ombudsman decisions and the limited use of collective redress mechanisms have historically placed a significant burden on firms.
So, for most in the industry, it is not about giving less compensation if things do go wrong but rather about making the whole process more efficient and predictable. Anything that helps with this can only be welcome.
It will be interesting to see what the certification regime reforms look like. The City has accepted the concept of fit and proper assessment for many years for customer facing staff and risk takers, so the basic concept is not in dispute. The complaint has sometimes been around the bureaucracy that can be involved in complying with some of the rules. As always, the devil will be in the detail of any reforms, with a balance to be struck between making sure that rolling bad apples do not come back into the industry and meeting the need to streamline processes.
"The Financial Ombudsman Service plays a vital role for consumers to get redress when things have gone wrong, and that will not change," she said. "But reform is needed to create a surer climate for investment."
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