AIFA welcomes Ombudsman discussion

Ramesh Sharma

April 1, 2006

Chris Cummings, AIFA’s director-general, said: “AIFA’s arguments are being listened to at the highest levels. The current reviews of both FOS and the Compensation Scheme are the direct result of our lobbying.

“We need an Ombudsman scheme which is fair, sustainable, practicable and easy for firms to understand. We are therefore delighted that FOS and the FSA have listened to the industry and have now published a full and comprehensive review of how the costs of the scheme should be divided between the regulated firms.

The current system has more than 70 per cent of FOS’ funding coming from fees charged to firms for considering complaints, with the remaining funding being raised by annual fees payable by all firms.

Chief Ombudsman, Walter Merricks, said: “The way in which the costs of the Ombudsman service are divided among financial firms is a subject close to the heart of many in the industry. The two free cases concept that we introduced for firms two years ago, in recognition of the fact that 95 per cent of firms have fewer than three disputes referred to the ombudsman each year, has been warmly welcomed, especially by smaller firms. We now look forward to hearing more ideas and feedback on other possible funding options as part of a broader debate on how firms should pay for the service.”

Vernon Everitt, FSA director of retail themes, said: “This is a sensible point at which to have a discussion around funding the Ombudsman service since we can look at it in parallel with the exercise already underway to review the funding of the Financial Services Compensation Scheme (FSCS).”

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