New bill will downgrade the role of the Financial Ombudsman Service | Letter

Iain Ramsay draws attention to the enhancing financial services bill and the influence of finance industry lobbying in proposed reforms that could be affect consumers Press reports on the king’s speech, including in the Guardian (The king’s speech: what is the government’s legislative agenda for the next 12 months?, 13 May), gave little coverage to the proposed enhancing financial services bill, a central part of which will downgrade the role of 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, therefore, 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, and indeed the Treasury seemed to accept without question industry clai