Spill your conflakes with FOS letter denying hindsight
Written on 15/05/2020

Spill your cornflakes with FOS letter

One of the features of the plague is that matters previously considered impossible, have, overnight, become the new normal.

It is in this light that FCA have encouraged firms to continue to work, and make allowance for corners cut due to the plague.  FCA have written to FOS on 15 April 2020 saying 

"….We know that the ombudsman service considers complaints based on the circumstances at the time and we want to provide as much reassurance as possible on this point, to ensure that firms respond positively to our measures, and consumers get the help they need…".  Nothing unusual in that.  The FCA's letter went on 

"…in determining what is fair and reasonable in all the circumstances of the individual case, the ombudsman will take account of the operational challenges faced by firms during this period, and the FCA's revised expectations of what constitutes compliance with our rules, guidance and standards, as well as what countered as good industry practice at the time…".

The FCA statement is broadly a reflection of their own rules, expressed in DISP section of the rulebook.

The Chief Ombudsman responded the following day "…in deciding what is fair and reasonable in the circumstance of an individual complaint, we must take into account relevant law; regulators' rules, guidance and standards; codes of practice and what the ombudsman considers to have been good industry practice at the time.

We do not make decisions with the benefit of hindsight…" (our bold).

 The letter goes on to confirm FOS guidance relating to regulated firms.   Many readers will already have spilt their cornflakes reading that little line, and those with cases currently with FOS, or anticipating complaints from a long tail of business might like to retain this letter.  We have dealt with cases that go back to the dawn of regulation, in April 1988, where firms have been held at fault for inadequate fact finding and inappropriate recommendations due to risk profile – concepts not heard of dreamed up at the time of the sale.

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