Ami “concerned” over FCA’s approach to FOS changes

The Association of Mortgage Intermediaries has criticised the Financial Conduct Authority, claiming that it has ignored the views of large swathes of financial services firms opposed to changes to the Financial Ombudsman Scheme.

Early last week, the FCA confirmed plans to extend FOS access to larger SMEs, classed as those with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m.

Current rules state firms with turnover of less than £1.76m and fewer than ten staff can use the ombudsman service.

The FCA predicts roughly 210,000 more SMEs in the UK will be eligible to complain to FOS.

AMI says that it is deeply concerned by the FCA’s approach, saying it has tried to overstate support, and understate objections:

“We… believe the claim to have received agreement from the ‘significant majority’ [of respondents] is misleading, particularly as a fifth of those who agreed were from individuals or SMEs themselves.

“The FCA announced that respondents had ‘strongly supported’ this extension of FOS. There were 65 responses, 13 of which raised fundamental objections to extend the eligibility.

“There has been a failure to recognise that most of these were raised by trade associations who respond on behalf of their members and represent their respective sectors,” reads an Ami statement.

Ami chief executive, Robert Sinclair, says the regulator has purposely played down pushback: “By diminishing the pushback to this extension it is apparent the FCA had already decided it was going ahead with its proposals and has tried to find the justification. To take the number of responses into account rather than who they represent is a skewed approach to analysing feedback,” he says.

Sinclair goes on to cite FCA meeting minutes from earlier this year, which he claims show the FCA did not discuss the issue of whether it was appropriate to extend the eligibility of FOS, and therefore the objections from the industry were not considered.

“The minutes from the FCA’s Board meeting in July, published nearly a week before the policy statement, show that this was not even a consideration in their decision.”

The meeting minutes state: “The Board agreed in principle to extend the jurisdiction of the Ombudsman to cover larger SMEs, charities and trusts, and a new category of personal guarantors, subject to receipt and confirmation of a suitable proposal for managing the new remit.”

On contacting the FCA and asking for a response to Ami’s claim that it is ignoring objections from a large number of trade association members, a spokesperson stated that “We carefully considered all of the responses we received and in PS18/21 [the policy statement ID] we set out why we have taken the approach we have.”

Asking for comment on the fact that a fifth of respondents which agreed with the FOS changes were individuals or SMEs themselves, the FCA says: “We review each comment on its own merit. This is not a numbers game. We also attach substantial weight to the quality of the arguments against our proposal. We were not persuaded by the arguments against our proposals, and have set out the reasons why in our PS.”

Furthermore, the FCA adds that it “completely” rejects the claim that it had decided to proceed with FOS changes before the consultation, and says that “our consultations are open and transparent, as required by statute.”

Recommended

House-For-Rent-Home-700.jpg

Private rental demand cooling: BM Solutions

Demand from UK residential renters is flattening off, according to research from BM Solutions. The research shows that 45 per cent of landlords saw no change in demand from tenants in the second quarter compared to the first. Meanwhile, London was the only area of the UK to see a fall in demand. More than […]

Mark-Carney-BoE-700x450.jpg
2

Interest rates predicted to rise in early 2020s

On 2 August 2018, the Bank Of England raised interest rates from 0.5 per cent to 0.75 per cent. The previous base rate rise was in November 2017, from 0.25 per cent to 0.5 per cent, which was the first raise for more than a decade. Mark Carney, governor of the Bank of England, said in August […]

Financing properties owned in trusts

Part of a series looking at various niche markets within the buy-to-let sector where choice of lender is more restricted than for normal borrowers. One such area involves loans secured on residential properties owned through trusts. Properties can be held in trust for many reasons. For example, if a property is left to minors in […]

Newsletter

News and expert analysis straight to your inbox

Sign up