Trade association PIMFA has called on the Financial Conduct Authority (FCA) to be ambitious and assertive in its proposals to modernise the redress system.

In response to the FCA’s paper ‘Modernising the Redress System’, PIMFA urged the regulator to look beyond the iterative proposals it has put forward.

It argued that while the headline proposal of ‘defining a mass redress event’ would be a welcome intervention, it felt many of the concrete proposals outlined in the paper would have mixed results and prove minor in their nature.

PIMFA instead suggested reforms that it believed would improve the current approach to mass redress events, alongside strengthening the FCA’s oversight of the complaints process.

These changes included resetting the boundaries around how the Financial Ombudsman Service (FOS) operates regarding mass redress events and, “crucially”, what the ombudsman does not do, which PIMFA said would reduce the operational pressure on the FOS.

In the case of mass redress events and where firm-led solutions have been agreed with the FCA and/or a skilled person, PIMFA argued the FOS should only follow on from the agreed redressed programme outcome, acting as a ‘final backstop’ to consider if the programme parameters have not been fulfilled where the customer remains unhappy with the outcome.

Looking beyond mass redress events, PIMFA also outlined how the FCA and government could consolidate the “disparate” regulatory regimes governing CMCs.

It stated that this would result in more consistent experiences for consumers and better regulator of the CMC sector more generally.

PIMFA said it would favour the FCA having powers over all financial services focused on CMCs, rather than the current regime that provides for Solicitors Regulation Authority-regulated ‘professional representatives’ to bring forward financial services claims.

“Ensuring that we have a fit for purpose redress system when things go wrong on a major scale is an important step in ensuring that consumers who have been let down receive a fair outcome,” commented PIMFA head of public affairs, Simon Harrington.

“Whilst we think that it is right that the FCA have identified some areas for reform – specifically the need to identify when a mass redress event has occurred, we also believe there is scope for them to be more ambitious and assertive in their proposals.

“We strongly believe that the FCA should give consideration to the role of the FOS and how it currently involves itself in mass redress events, and where they have worked closely with firms and/or a skilled person to identify and resolve any failings, the FOS should be out of scope, giving firms the breathing space they need to meet their redress obligations.

“Only once a consumer has received and understood an offer of redress, do we believe that the FOS should be in scope to ensure the process is as efficient as possible and that consumers who have been let down do not inadvertently find themselves further delayed by process and bureaucracy.

“We would also strongly urge the FCA to look beyond the crystallisation of mass redress events and consider the regulatory regime which governs complaints more broadly. To this end, we strongly believe that there is scope for the FCA, in consultation with government, to consolidate the regulatory regimes which currently governs the CMC sector.

“It is vital that there is consistency of consumer experience, and most pressingly, consistency of standards across the board and this can only be achieved through a consolidated regulatory regime.”

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