Lloyd's Maritime and Commercial Law Quarterly
The intersection of commercial powers and complaints: the Financial Ombudsman Service, consumer protection and the courts
P E Morris *
The Financial Ombudsman Service (FOS) is the leading form of consumer redress in the United Kingdom. Despite its arm’s length relationship with Government, its corporate status and role as essentially a private dispute resolution mechanism, its determinations and decision-making procedures are subject to judicial scrutiny, principally though not exclusively via the principles of judicial review of administrative action. This article outlines the FOS’s role and explores the FOS–courts interface by extrapolating a series of principles relating to its effective functioning from a quartet of contemporary cases.
Background
The Financial Ombudsman Service (“FOS”) is the largest Ombudsman scheme in the world. Created pursuant to a minimalist statutory framework in the Financial Services and Markets Act 2000 (FiSMA”),1 it incorporates into a single organisation, operating under one roof in London Docklands, 11 Ombudsmen and complaints-handling arrangements which previously existed as separate schemes2 on self-regulatory, statutory and hybrid bases with widely differing jurisdictions, procedures and dispute resolution philosophies. These discrepancies have now been harmonised and consumers provided with a single point of entry, standardised treatment of complaints and access to a body enjoying a close policy and operational relationship with the Financial Services Authority (“FSA”) as the lead regulator. During 2007–2008 the FOS resolved nearly 100,000 disputes, received over 123,000 complaints which financial services businesses had been unable to resolve in-house (an increase of 30 per cent on the previous year) and handled a record 794,648 enquiries. This was accomplished on an annual budget of £55.5 million and a total staff establishment of 825.3
The principal function of the FOS is to resolve complaints “quickly and with minimum formality”,4 which it achieves in the main by use of conciliation and (case-handler)
* Independent Researcher.
1. FiSMA, Part XVI, Sch 17.
2. See generally on these: A McGee, The Financial Services Ombudsmen (London, 1992); R James, Private Ombudsmen and Public Law (Aldershot, 1997); P Rawlings and C Willett, “Ombudsmen Schemes in the United Kingdom’s Financial Services Sector: The Insurance Ombudsman, The Banking Ombudsman and the Building Societies Ombudsman” (1994) 17 Journal of Consumer Policy 304; and P E Morris, “The Banking Ombudsman—Five Years On” [1992] LMCLQ 220.
3. FOS, Annual Review 2007/08, 1.
4. FiSMA, s 225(2).
THE INTERSECTION OF COMMERCIAL POWERS AND COMPLAINTS
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