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ombudsman news

issue 68

March / April 2008

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FSA-approved industry guidance

How does FSA-approved "industry guidance" affect the way the ombudsman service decides complaints-

a policy adviser at a trade association

The Financial Services Authority's framework for recognising "industry guidance" came into effect in September 2007, as part of the regulator's move towards principles-based regulation. It allows trade associations, professional bodies and firms to seek formal confirmation for the guidance they produce, to help their members understand and meet the FSA's regulatory requirements.

A policy statement published by the FSA in September 2007 (policy statement 07/16) describes the role of "industry guidance" and the process for seeking the FSA's confirmation of such guidance.

The policy statement also covers how "industry guidance" relates to the Financial Ombudsman Service. It explains that the decisions made by the ombudsman service are not about enforcing the FSA's rules - but about protecting the rights of consumers. FSA-approved "industry guidance" cannot affect the rights of third parties - such as consumers, when they seek to enforce their rights through the courts or the Financial Ombudsman Service.

There is no explicit requirement in the FSA's complaints-handling rules (the "DISP" rules) for the ombudsman service to consider approved "industry guidance" when it deals with individual disputes. However, relevant "industry guidance" may help the ombudsman to establish what was thought to be good industry practice at a particular time - or to help explain to a consumer that a firm's approach is not unique.

is a "final decision" really final-

Is it true that an ombudsman's "final decision" really is final, and that a business has to comply-

an independent financial adviser (IFA)

Under the legislation that established the Financial Ombudsman Service and gave us our powers, an ombudsman decision is final and binding on the business, if it is accepted by the consumer.

An ombudsman decision gives finality and certainty. It means that a dispute that has probably already lasted for many months - absorbing increasing amounts of senior management time and business resource - can be brought to an end, once and for all.

No dispute can be allowed to continue for ever - either at the ombudsman service or in the courts, to which we are an alternative process. The side that loses would often like to continue arguing their case indefinitely. But a line has to be drawn - and a final decision made - once we are satisfied that both parties have had sufficient opportunity to tell us their version of events. The ombudsman decision marks the end of our involvement - and the end of our consideration of the dispute.

You can find out more about our process on this website - in the FAQ section providing information for businesses covered by the ombudsman service.

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ombudsman news issue 68 [PDF format]

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.