The Financial Ombudsman Service will be taking over the handling of complaints on all consumer credit issues.
Under the Consumer Credit Act 2006, passed in March last year to update the framework under which consumer credit activities are carried out and regulated, legislation includes requirements on businesses with consumer credit licences issued by the Office of Fair Trading to have formal complaints handling procedures in place.
And for the first time, these businesses will also be covered on a statutory basis by the FOS. What does this mean to the secured loans industry and why is it good news?
Simply put, this legislation applies the same system of complaints handling that is already being used in the wider financial services market and this must have the effect of in-creasing confidence not only among customers but also among brokers – particularly those who have previously held back from dealing in secured loans.
This is a step towards harmonising the way in which the mortgage and loan markets operate procedures with regard to how consumers are treated.
While formal regulation has been discounted, this latest move is a positive step. I am sure that not everyone will be satisfied until the secured loans industry is fully regulated but whether that happens or not, the involvement of the FOS will undoubtedly give a boost to the reputation of our industry.
It is worth remembering that the legislation, which goes live in April, means all advisers involved in the market will have to have written complaints handling procedures as part of their sales processes and documentation.
As mortgage brokers are already familiar with the FOS requirements, the only grumbling we will hear will be from the dinosaurs who are afraid of the regulatory framework and whose processes may treat customers shabbily rather than fairly.