RE: Reeves seeks reform of UK consumer redress in the financial services sector13 Nov 2024 07:28
Here we go:
Chancellor Rachel Reeves will on Thursday call for an overhaul of the UK system for consumer redress in the financial services sector, as lenders brace for a potential multibillion-pound bill for alleged mis-selling of car finance.
Reeves wants to modernise the operation of the Financial Ombudsman Service (FOS) to give consumers and businesses more clarity about the compensation landscape in future, according to allies of the chancellor.
She will use her Mansion House speech on Thursday to promise stability as she attempts to reassure her City of London audience that she has a clear economic growth strategy following her £40bn tax-raising Budget.
The role of the FOS in major City compensation cases has been under scrutiny in the Treasury for months, but Reeves’ allies said the need for reform had been brought into stark relief by recent turmoil in the car finance sector.
The FOS has taken a consumer-friendly stance on complaints over alleged mis-selling of car finance that has put the Financial Conduct Authority, the chief UK financial regulator, on the back foot, and threatened to leave banks exposed to compensation claims worth billions of pounds.
“The FOS has an important role to play in protecting consumers but there is a case for modernising it and giving consumers and firms more clarity,” said one person briefed on Reeves’ thinking.
Two rulings by the FOS at the start of this year upholding consumer claims against banks have forced the FCA to step in and pause such compensation cases while it investigates the issue of commissions paid to car dealersh
Sign In
Follow the stocks
