Consumers&#39 Association warns of gap in consumer protection

The Consumers&#39 Association has warned that proposals to change the complaints process for mortgage and general insurance could leave some consumers with no recourse to complain.

The Treasury has produced three proposals to address what should happen to consumers who currently have protection through the Mortgage CodeArbitration Scheme or the General Insurance Standards Council Dispute Resolution Forum but want to complain about products sold to them before FSA regulation.

These include providing no redress for consumers who have purchased products before FSA regulation. Consumers will therefore have no option other then to go through the courts. Another proposal will give the industry responsibility for consumers who have purchased products before FSA regulation, while another proposal will give the Financial Ombudsman Service responsibility for consumers. The Consumers&#39 Association says it would not be difficult to expand this brief and would provide consumers with a one-stop shop for complaints.

The Consumers&#39 Association has warned the government that the only way to ensure a full, affordable and accessible complaints system is to transfer responsibility to the Financial Ombudsman Service.

Laurence Baxter, senior policy adviser at the Consumers&#39 Association, says: “We are concerned by proposals to leave consumers with legitimate issues completely out to dry. All consumers should have access to redress irrespective of where and when they bought their product.

“Giving industry responsibility for those consumers complaints who will not be protected by FSA regulation is outrageous. Extending the Ombudsman&#39s remit would be a far more effective solution. Not only does it have an excellent track record in dealing with consumer complaints, it has already earned consumers&#39 trust.”