Tenet hits out at increased FOS limit

Tenet has hit out at the decision to increase the Financial Ombudsman Service (FOS) limit from £100,000 to £150,000, deeming it “inappropriate”.

The support services provider said the decision could impact professional indemnity insurance premiums and excesses because of the cost of the redress being paid, although the Financial Services Authority (FSA) has already denied this.

It also pointed out the FOS is the only body in the UK where a final decision cannot be challenged or have an appeal process and cited inconsistencies in previous rulings.

Furthermore, it questioned whether adjudicators are qualified to make decisions, saying the current Chief Ombudsman, Natalie Ceeney, was previously a "head librarian".

Keith Richards, distribution and development director at Tenet, said: "Whilst it is important that consumers have an appropriate mechanism to pursue complaints and are responded to fairly and within a reasonable timeframe, advisers also need to be treated fairly.

"Whilst there are some changes to the complaint handling rules that we consider sensible and indeed already incorporate into our processes, there are other elements that will add further challenge to an already impacted financial services sector.

"The current £100,000 limit is much higher than the limit for the new Legal Services Ombudsman, set by Parliament at £30,000, plus of course, they have a long stop which we are still being denied. Again, the playing field seems to be less than level for the IFA community."

Tenet also warned it might become difficult for advisers to challenge the thinking of adjudicators as detailed reports into their findings are to be replaced by a "couple of paragraphs, simply summarising the outcome and devoid of any background".

In reply, the FOS pointed out only around 0.2% of complaints resolved by the ombudsman relate to payments over £100,000 and reminded the industry less than 1.5% of all complaints it received last year were about IFAs.

It also said Ceeney was not a former "head librarian", as described by Tenet, but in fact the chief executive of the National Archives in Kew.

It added: "The ombudsman isn't the only organisation which can make binding decisions - for example, the Pensions Ombudsman is one of many that also can do this - with higher limits."