Lord Hunt's remit was to consider ways to improve the
transparency and accessibility of the FOS, which handles complaints
brought by consumers and small businesses against firms providing
financial services, such as banks, building societies, financial
advisers and insurers.
"In my view, the FOS still looks too much like a middle-class
service, for middle-class people" wrote Lord Hunt in his report. "I
believe the profile of those using the FOS should, must and will
evolve, as the organisation thinks not only in terms of its
traditional areas of activity – dealing with matters such as
mortgages, insurance and pension products – but also in terms of
the problems that typically afflict our less affluent citizens," he
wrote.
"Difficulties with debt management are only likely to increase
in scale and numbers as the current economic difficulties mount,"
he added. "The sums of money involved may generally be on the low
side by FOS standards, but the human misery attendant upon them can
be devastating."
The report suggests a number of measures to widen the service's
appeal, including a more user-friendly name (he suggests 'Financial
Complaints Service'), extended opening hours, increased investment
in advertising the FOS as a free service, and a fast-track system
for lower-value debt- and credit-related cases.
The 73 recommendations do not include making complainants pay a
claim fee. "It would be hard to think of any measure that would
damage accessibility more comprehensively," he wrote.
But Lord Hunt is in favour of charging fees to claims management
companies that promote vexatious claims, provided the companies can
be prevented from passing the extra cost on to consumers. And he
believes there is an "increasingly strong case" for such companies
to contribute to FOS statutory funding, given the commercial
benefit they derive from the service.
In addition, he suggests that defendant firms who deliberately
drag out the initial stages of complaints handling and so increase
FOS costs (so-called "enforced deadlock" cases) should face
penalties.
There are no proposals to change the current "fair and
reasonable in all the circumstances" test applied by the FOS when
deciding a case. Nor is there any recommendation to allow external
appeals against FOS decisions.
The report, however, acknowledges the need for more transparency
about the way the FOS operates. Lord Hunt's solution is FOSBOOK – a
publicly accessible record of the service's practice and decisions,
including case reports (in anonymised form). Future FOS decisions
would draw upon and explicitly refer to guidance in FOSBOOK and
explain any variation from it.
Lord Hunt also believes there should be more openness about
firms' complaints performance. His proposals include an
annual award scheme for firms that have achieved improvements and a
'wooden spoon' for the worst performers.
Acknowledging that these proposals may be "too radical" for
some, he comments: "Performance in complaints handling is a
legitimate factor for a customer to take into account when making
decisions. Hence it is a legitimate area for competition between
providers. It should also be an important consideration for the
Treating Customers Fairly initiative".
