‘Essential lifeline’ for consumers must not be restricted, say organisations

Concerns that consumers could face a harder uphill battle to get redress when they have problems with financial firms have been raised by consumer campaigners and charities.

Which? and a coalition of organisations, including Money Saving Expert, Citizens Advice, Age UK, Surviving Economic Abuse, StepChange and Fairer Finance, suggested that a shake-up could potentially lock some consumers out of free, independent redress.

They raised concerns that potential changes to the Financial Ombudsman Service (FOS) in the Financial Services and Markets Bill could make it harder for people to access compensation.

But it is understood the Treasury rejects the characterisation that access would be restricted and its aim is to strengthen the service and bring more consistency for consumers.

People can ask the ombudsman service to step in when they cannot come to an agreement with their financial services provider.

The service is free to consumers to use and gives them a potential route to a payout without needing to resort to court processes.

The joint statement from organisations raised concerns about more complexities being brought into how complaints are decided and the risk of a potential shift from a “level playing field” to one that initially presumes the firm was in the right.

Potential changes could lead to significant delays and extra stress for consumers, the statement claimed.

Rocio Concha, Which? director of policy and advocacy, said: “For millions of families walking a financial tightrope, the Financial Ombudsman is an essential lifeline that stands between them and big business when something goes wrong.

“When many households are already stretched to breaking point, introducing reforms that risk making it slower and more challenging for people to access redress sends a chilling message: that when powerful institutions make costly mistakes, ordinary people will be left to pick up the pieces.”

The Treasury views the reforms as designed to make the FOS more predictable, ensuring the Financial Conduct Authority (FCA) remains responsible for setting and interpreting regulatory rules, and giving consumers and firms greater certainty about how complaints will be handled.

A Treasury spokesperson said: “These reforms will strengthen the Financial Ombudsman Service, not weaken it.

“The ombudsman will remain independent and impartial in resolving disputes, while the changes provide greater consistency and more certainty for both consumers and firms.”