The Financial Ombudsman Service: Reviewing Some Aspects Of Its Operation And Its Interaction With The FSA

In her statement on 4 November announcing details of the Treasury's review of the effectiveness of the Financial Services and Markets Act 2000, (the "N2+2 Review") Ruth Kelly, Financial Secretary to HM Treasury also announced that the Financial Ombudsman Service and the Financial Services Authority were being asked to take forward the aspect of the review concerning the Ombudsman service. The review is to cover the way that the Ombudsman interacts with the FSA's regulatory responsibilities and the work of the other bodies with regulatory responsibilities; and to consider the case for amending the process by which firms may appeal against Ombudsman decisions.

The FSA and the Ombudsman have appointed a group of expert stakeholders to oversee, in the early part of next year, the scope, terms and conduct of the consultation process overall and to have input into the shaping of the consultation document. The group is to be chaired by Colin Harris, chairman of the Mortgage Code Compliance Board; the other members are: Matthew Bullock of the Financial Services Practitioner Panel; John Howard, of the Financial Services Consumer Panel; Roger Sanders of the Small Business Practitioner Panel and Diana Wright, Personal Finance writer for The Sunday Times.

Subject to the views of the Review Oversight Group, it is expected that the review will begin by asking key stakeholder groups, trade associations and consumer bodies for their experiences and observations. This will allow an informed public consultation exercise to be undertaken early in 2004. The overall N2+2 Review is expected to be completed by November 2004. As the Financial Secretary indicated, the importance of the Ombudsman to consumer protection is such that any changes to the regulatory structure should only be made after careful consideration and consultation.

At the same time the Ombudsman intends to commission an independent assessment of its work, and will be consulting the Review Oversight Group about the scope of this exercise.