Plans to change the Financial Ombudsman Service’s role ‘reflect pure interest-group lobbying by the finance industry’, according to Iain Ramsay, emeritus professor of law at the University of Kent.
New Bill Will Downgrade the Role of the Financial Ombudsman Service
Iain Ramsay draws attention to the enhancing financial services bill and the influence of finance industry lobbying in proposed reforms that could affect consumers. In a letter to the Guardian, he notes that press reports on the king’s speech gave little coverage to this bill, which is central to downgrading the Financial Ombudsman Service (FOS).
Cloaked in the guise of ‘modernisation’, the proposals reflect pure interest-group lobbying by the finance industry, which already exercises substantial influence on policy. Given that the costs of consumer redress may be concentrated in a few large firms, they have a strong incentive to participate in the policy process. In contrast, consumers of financial products have diffuse concerns and more limited expertise, and face high organisational costs.
One might expect that independent empirical and social science evidence would play a key role for the government in assessing reform proposals. Yet this did not occur here. Indeed, the Treasury seemed to accept without question industry claims concerning the FOS, making little attempt to assess reviews of its work or explore its role in the financial regulatory system. The policy outcome is therefore likely to be at best an exercise in accidental wisdom.
Ramsay concludes that the reforms prioritise industry interests over consumer protection, highlighting a failure to rely on evidence-based policymaking.
