30 January 2025
PIMFA calls for an ambitious and assertive approach in modernising the redress system
The trade association urges the FCA to reconsider the role of FOS, and explore consolidating the regulatory regime for CMCs
PIMFA, the trade association for wealth management, investment services and the financial advice and planning industry, has called on the Financial Conduct Authority (FCA) to be ambitious in its proposals to modernise the redress system and look beyond the iterative proposals they have put forward in their recent discussion paper on modernising the redress system. In its response to the paper, PIMFA has argued that whilst the headline proposal of ‘defining a mass redress event’ would be a welcome intervention, many of the concrete proposals set out within the paper would have mixed results and would prove minor in their nature.
Instead, PIMFA has suggested reforms which would both improve the current approach to mass redress events as well as strengthen the regulator’s oversight of the complaints process.
Where these mass redress events occur, PIMFA believes that there is scope in resetting the boundaries around how the Financial Ombudsman Service (FOS) operates and, crucially, about what it does not do, which would likely significantly reduce the operational pressure on the FOS.
Consequently, PIMFA believes that in the case of mass redress events, and where firm-led solutions have been agreed in dialogue with the FCA and/or a Skilled Person, the FOS should only follow on from the agreed redress 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.
Beyond the scope of mass redress events, the trade body also outlined how the FCA and government should consider consolidating the disparate regulatory regimes governing CMCs to overcome that the current regulatory arbitrage with the two primary regulatory regimes. This would result in more consistent experiences for consumers and better regulation of the CMC sector more generally. PIMFA would favour the FCA having powers over all financial services focused CMCs rather than the current regime which provides for some Solicitors Regulation Authority (SRA) regulated ‘professional representatives to bring forward financial services claims.
Simon Harrington, Head of Public Affairs at PIMFA, commented: “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. 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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NOTES TO EDITORS
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
- The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
- PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
- Further information can be found at pimfa.co.uk
Contact
For further information on this release or other press matters please contact:
Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk,
+44 (0)20 7011 9869 / +44 (0)7979 493225.
