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first annual report charts progress in setting up the new single Financial Ombudsman Service

25 May 2000

The Financial Services Authority (the FSA), in association with the Financial Ombudsman Service, has published feedback on the consultation for complaints handling and the new single Ombudsman Service and the paper sets out for comment the draft rules, which will govern the handling of consumer complaints under the new system of financial services regulation. These rules are based on the proposals consulted on last autumn, which received widespread support.

To ensure consistently high standards, all FSA authorised firms will need to:

  • publish complaints procedures and make them easily available to consumers;
  • investigate complaints promptly and effectively within a maximum of 8 weeks;
  • inform customers who remain dissatisfied at the end of the complaints process of the new Ombudsman Service;
  • keep records of all complaints for a minimum period of six years;
  • submit returns to the FSA on the number and type of complaints and the length of time taken to resolve them.

Christine Farnish, Director of Consumer Relations at the FSA, said:

The new complaints arrangements are a key element of the regulatory framework to protect consumers of financial services. The recent consultation has shown widespread support for the proposals among consumer groups and across the financial services industry. Both consumers and firms themselves benefit from effective complaints-handling arrangements. Consumers can get their problems resolved quickly and effectively; and firms receive useful consumer feedback and achieve reputational and commercial benefits from enhanced consumer confidence.

Walter Merricks, Chief Ombudsman at the new Financial Ombudsman Service, said:

Building on the firm foundations of the complaints-handling and ombudsman schemes currently in place, we are now well under way in our work setting up the integrated ombudsman service - providing a single port of call for consumers and reducing confusion about where to turn for help in resolving financial disputes.

The new ombudsman service will be available to private individuals, small businesses with a turnover of less than £1 million and to third parties (ie not direct customers) in specified circumstances. The limit on individual awards that the new Financial Ombudsman Service can make will be £100,000.

All authorised firms - banks and building societies, insurance companies and investment firms etc - will be covered by the Financial Ombudsman Service on a compulsory basis for regulated activities, plus those currently unregulated activities - such as mortgage lending - which are currently covered by the existing ombudsman schemes.

In the long term, the aim of the new Financial Ombudsman Service is to cover as many areas of financial services as possible. The FSA and the Financial Ombudsman Service invite comments on the draft rules by 31 August 2000.

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