Super-ombudsman plan will backfire, ministers warned
Thursday 21 May 1998
All six have told the Government its plans will force them to operate like a court, weakening consumer protection and sharply boosting the cost of dealing with thousands of complaints every year.
The Government wants to create the super-ombudsman under its unified financial regulator, the Financial Services Authority. One body would replace six ombudsman who deal separately with banking, insurance, investment, pensions and building societies.
But the plan will clash with a Bill to bring European human rights into British law, giving everyone the right to a public hearing if a complaint is brought against them.
Peter Dean, investment ombudsman, said: "Because of the Convention we will have to allow for oral and public hearings, cross-examination and so on: in other words the very apparatus of a formal court procedure which the current ombudsman schemes have been set up to avoid."
Mr Dean warned the size of the bureacracy created by a single ombudsman would put people off complaining. "There's a risk the skills, focus and user-friendliness of schemes will be dissipated," he said.
Separately, Mr Dean said he was concerned investment firms were hyping their investment products using dazzling figures from the bull-run of the stockmarket over the last year.
As consumers responded to advertisements boasting of the growth, companies were so overwhelmed they failed to even to reply to applications. In some cases, customers had sent cheques and received no reply.
"Firms are making a feature of past performance in their advertising. There's a danger they will say `roll up, roll up' and people will rush in when they don't understand the product. You only know after the fact if people have been misled."
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