The FCA and FOS: Partners in 'Modernising' Justice? Or Just Watering It Down?

When the Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) announced they’d be "working together to modernise" the redress process, the sceptical among us couldn’t help but wonder: is this about efficiency or industry cover-ups? After all, isn’t the FOS supposed to be the independent arbiter for wronged consumers? And yet here they are, linking arms with the regulator, and calling it progress.

The rhetoric is all too familiar. "We’ve heard from stakeholders," they say. By stakeholders, do they mean the consumers who’ve been sold shoddy financial products, or the firms who’ve profited handsomely while ignoring regulations? Because it sure sounds like the latter. Apparently, firms find it “challenging” to make representations when issues of wider significance crop up. How inconvenient for them. And now, our two watchdogs want to streamline the process — ostensibly to tackle problems early. But early for whom? The consumer? Or the firms who’d rather sweep things under the rug before anyone notices?

The joint paper trumpets the need for a more “effective and efficient” redress framework, particularly for those pesky "mass redress events" — like fee-for-no-service cases or hidden commissions. In other words, when there’s systemic failure across the industry. Instead of handling each case on its merits, they’re keen to manage issues before they “escalate.” Escalate to what, exactly? Mass payouts? Consumer outrage? Bad PR for the City?

Call me cynical, but it seems awfully convenient that this partnership between the FCA and FOS comes hot on the heels of the Government’s growth agenda for the City. Coincidence? Hardly. Is this really about protecting consumers, or is it about shielding firms from the fallout of their own dodgy practices? The timing is impeccable.

Ah, the FCA points to the British Steel Pension Scheme and PPI as prime examples of “mass redress events.” Because clearly, we all remember how well those were handled, don’t we? Now, they’re stressing the importance of prompt reporting and swift action. According to them, their investigations play an “important role” in identifying systemic issues early on — like a smoke detector that goes off after the house has already burned down. “Quick and effective” fixes, they say. If by quick, they mean dragging it out for years and by effective, they mean negotiating a slap on the wrist for firms, then sure, spot on.

The whole point of an independent ombudsman is to offer a fair, unbiased judgement on individual cases. But if the FCA starts whispering in the ear of the FOS whenever there’s a potential industry-wide scandal, how independent can the FOS really be? And what happens to consumer rights in this brave new world of cooperation? Will individual cases still be considered on their own merits, or are we moving towards a model where the scales of justice tip in favour of protecting financial firms from large-scale accountability?

The FCA and FOS want to hear from stakeholders until January 30, 2025. Let’s hope they actually listen to the consumers who’ve been wronged and not just the industry voices pleading for a softer touch. Because if this is what "modernisation" looks like, it’s a pretty thin disguise for diluting governance and weakening consumer protection.