Ahmed Bawa, managing director of Rosemount Financial Solutions has warned that the actions of the Financial Ombudsman Service (FOS) are undermining confidence and potentially damaging growth across the industry.
In an open letter to Emma Reynolds MP, the Economic Secretary to the Treasury, Bawa called for urgent reform of the FOS to better support advisers, firms, and consumers alike.
Writing on behalf of his network, Bawa emphasised that the organisation’s approach to complaint handling and dispute resolution has become a significant regulatory barrier.
He welcomed HM Treasury’s recent policy paper, New approach to ensure regulators and regulation support growth, noting that it identifies “possible areas of concern with the FOS,” which he strongly agrees need to be addressed.
The letter highlighted three particular issues from the paper: Whether the FOS is effectively acting as a quasi-regulator, operating outside its intended remit; Whether it applies today’s regulatory standards to historical actions, creating unfair outcomes; and whether compensation practices that have developed over time remain appropriate or require updating.
Bawa said: “There is definitely a problem in the way the FOS operates. It does operate as a quasi-regulator, which won’t promote confidence or support growth in our industry.
“Unless there is real change in the way the FOS operates then, try as it might, the FCA’s attempts at helping the industry will have little impact.”
While praising the Financial Conduct Authority (FCA) for attempting to foster growth and confidence, Bawa warned that these efforts risk being “thwarted unless there is a corresponding change in culture from the FOS.”
To support the review process, Bawa included an appendix with detailed evidence and case analysis compiled with the help of complaint handling professionals, many of whom have worked across multiple firms in the industry.
He also extended an offer to meet with Reynolds or her officials to further discuss the issues.
Bawa concluded his letter with a broader appeal, noting that a fairer and more constructive FOS could contribute to job creation, investment, and improved quality of life nationwide.
He concluded: “Many other financial planning firms would undoubtably be grateful too, if changes could be made at the FOS to make the current system fairer – which would create jobs, boost investment and improve quality of life across the country.”
A Financial Ombudsman Service spokesperson said: “We are an independent dispute resolution service designed to resolve cases on their individual merits taking into account relevant law, regulation and good industry practice, and with minimum formality. In the majority of cases we find that financial firms have acted properly.
“This year we’ve become the first UK Ombudsman to introduce charges for professional representatives – not only making our funding model fairer, but also encouraging better due diligence when they bring cases to our service.
“We’re also working closely with the Financial Conduct Authority and HM Treasury on an ambitious modernisation programme which will reform the dispute resolution system, making it fit for the future.”
