The power to settle financial complaints.
The power to settle financial complaints.
The Financial Ombudsman Service is a public body set up by Parliament. We carry out statutory functions on a non-commercial, not-for-profit basis.
We are the statutory dispute-resolution scheme set up under the provisions of Part XVI and Schedule 17 of the Financial Services and Markets Act 2000 and section 59 of the Consumer Credit Act 2006.
The "body corporate" that administers the ombudsman scheme as the "scheme operator" (under s225 of the Financial Services and Markets Act) takes the form of a company "limited by guarantee and not having a share capital". This company is called the Financial Ombudsman Service Limited. The powers and functions of the scheme operator are set out in company's legal constitution:
The scheme operator has a board consisting of six directors – including the chairman. They are appointed by the Financial Conduct Authority (FCA) under the Financial Services and Markets Act 2000. The chairman of the board is appointed by the FCA with the approval of the HM Treasury.
These directors (or board members) are "non-executive" – they are not involved in considering individual complaints. Their job as "public interest" directors is to take a strategic overview and ensure that the ombudsman service is properly resourced and able to carry out its work effectively and independently.
The directors appoint the ombudsmen and publish a report annually – as well as publishing the minutes of their board meetings. The directors also form a number of sub-committees of the full board.
The rules setting out how the Financial Ombudsman Service (and businesses) should handle complaints are published as part of the FCA's Handbook – in the section called Dispute resolution: complaints.
Parliament gave the power to make these rules to the FCA (and previously the FSA) and to the board of the Financial Ombudsman Service. The board of the ombudsman service exercises this power to make rules by approving official legal documents called "instruments".
The legislation and rules show the close "constitutional" relationship between the Financial Ombudsman Service and the regulators – the FCA and the Office of Fair Trading (OFT). In operational terms, the relationship between us and other official bodies is set out in a number of formal documents.
The memoranda of understanding between the ombudsman service and these official bodies reflect the fact that, while each of us is operationally independent and has distinct functions, we need to co-operate and communicate constructively, in order to carry out our functions effectively.
There are procedures in place for ensuring liaison and co-operation between us and both the FCA and the OFT on issues that might lead to large numbers of complaints, including a senior-level co-ordination committee.