July 18, 2018 / 5:11 PM / 4 months ago

UK financial ombudsman says will be ready for small firms

LONDON (Reuters) - Britain’s financial industry complaints body said it was ready to broaden its remit to include more small companies despite a review that raised questions about its performance.

Caroline Wayman, chief executive of the Financial Ombudsman Service (FOS), told lawmakers that taking on complaints from small and medium sized companies (SMEs) was “not a bridge too far for us”.

The Financial Conduct Authority, Britain’s main financial markets regulator, has proposed that FOS takes on complaints from 160,000 more small companies, charities and trusts.

“We are preparing on the basis that the expansion does happen,” Wayman told parliament’s Treasury Select Committee on Wednesday.

The committee’s chair Nicky Morgan said FOS was already failing to meet some performance targets.

“I think we can and will be ready,” Wayman said.

FOS currently deals with individuals or very small or “micro” companies that employ just a few people. FOS handles complaints that banks and other financial firms have been unable to resolve themselves.

Some lawmakers would prefer setting up a new tribunal to handle SME complaints, which would need legislation, and several committee members questioned FOS capacity to take on more work.

A report commissioned by FOS and published earlier this month found that the compensation body requires a better funding model to retain public confidence in its work.

Richard Lloyd, who wrote the report,, told the committee that FOS would be capable of handling SME complaints if his recommendations were implemented quickly.

Lloyd’s report followed a documentary program that aired on Britain’s Channel 4 in March and which alleged that FOS staff were ill-equipped to deal with complex cases.

FOS paid consultants PwC about 10 million pounds to help manage a restructuring program that began in 2016 and to devise a performance management program - criticized by FOS staff as more suited to a sales workforce.

“They came up with a model that did not fit without adaptation,” FOS Chair Nicholas Montagu told the lawmakers.

FOS’ work has been dominated by complaints over payment protection insurance or PPI, Britain’s biggest retail financial scandal costing banks over 30 billion pounds in compensation.

An August 2019 deadline has been set for final claims, and staff at FOS, which employs 3,500 people, worry about their jobs once PPI cases dry up.

“Our organization needs to be considerably smaller in a post PPI world,” Wayman told lawmakers.

FOS is also facing an “explosion of activity” by companies that manage complaints over short-term loans on behalf of individuals, Wayman said.

Reporting by Huw Jones; Editing by Alexandra Hudson

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