The government has given the Financial Ombudsman Service (FOS) a new duty to name and shame firms that it has investigated even if the complaint in question proves groundless.
Under the draft Financial Services Bill, published yesterday, the FOS would be required to publish reports on its determinations into consumer complaints.
Currently the details of individual FOS determinations remain confidential but under the reforms businesses will be named – even if the case against them is found to be groundless – while complainants will remain anonymous.
Robbie Constance, senior associate at City law firm Reynolds Porter Chamberlain, said that the new duty created an unfair playing field between consumers and companies.
He said: “These reforms set out to improve transparency, yet create inequality. Were the case heard in court both parties would be named."
“The reforms mean businesses will be less inclined to refer cases for a final determination because even if they defend the complaint successfully, they may still suffer reputational damage.
“By contrast, a complainant that, say, may have been found to have lied will remain anonymous.
“This will put pressure on businesses to settle complaints made to the FOS at an early stage to avoid adverse publicity – whether they are right or wrong – and will make them even more vulnerable to targeting by claims management companies.
“Firms will require clarification of the exception to this proposed rule where the Ombudsman deems publication ‘inappropriate’ - and whether they can apply for such a ruling."
Websites
No comments yet