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What will the FSA, OFT and ombudsman service do?

When a potential wider-implications issue is raised

  1. Depending on the type of issue raised, the ombudsman service will confer with the FSA or OFT (or both of them). They will decide jointly whether:
    • the issue is one with wider implications; and
    • whether the wider-implications process should be applied, and how.
  1. In some cases they may agree that, though an issue has wider implications, it is not suitable for consideration under the wider-implications procedure. For example, where the issue is:
    • not new;
    • the responsibility of some other body or covered by an industry code;
    • about legitimate business competition or judgement;
    • one where the impact is too small to justify the use of regulatory resources relative to other priorities.

What might the FSA or OFT do if the wider-implications process is applied?

  1. Will the FSA or OFT take action themselves? They will consider if this would be appropriate in the light of their statutory powers, strategic objectives and administrative priorities.
  1. In the case of the FSA, action could include:
    • taking supervisory action;
    • taking enforcement action;
    • taking regulatory action under the Unfair Terms in Consumer Contacts Regulations;
    • securing redress;
    • publishing rules and/or guidance.
  1. In the case of the OFT, action could include:
    • taking enforcement action under the Competition Act 1998;
    • taking enforcement action under consumer protection legislation;
    • revoking an organisation’s consumer credit licence;
    • taking other action under licensing powers or issuing a warning about future conduct;
    • undertaking a market study;
    • making a market investigation reference to the Competition Commission;
    • issuing guidance.
  1. Will the FSA or OFT seek industry and consumer input? The FSA or OFT may decide to seek the views of relevant industry and consumer bodies. In order to ensure its independence the ombudsman service may be unable to take part in such discussions unless both industry and consumer interests are represented.
  1. Will action by the FSA or OFT deal with past problems? Not always. The FSA or OFT may be able to deal only with future practice, or decide to do so, leaving the ombudsman service to deal with individual complaints about past problems. It is also likely that individual consumers will continue to have access to the ombudsman service if a business (an FSA-regulated firm or an OFT licensee) does not comply with any regulatory action by the FSA or OFT.
  1. Will the FSA or OFT provide information to the ombudsman service? The FSA or OFT may decide to offer information to the ombudsman service, for example on interpreting or applying FSA rules or OFT guidance, for it to consider when it decides individual cases.

what might the ombudsman service do if the wider-implications process is applied?

  1. Will individual cases be progressed or suspended? It is up to the ombudsman service to decide whether to progress or suspend individual cases while the FSA or OFT considers whether to take action, or while they do take action.
  1. What if the FSA or OFT provides information to the ombudsman service? In individual cases it is considering, the ombudsman service:
    • will take account of any information provided by the FSA or OFT, especially if it relates to interpreting or applying FSA rules or OFT guidance; and
    • before reaching a decision on a case, give the parties to the complaint an opportunity to comment on such information (or a summary) on which it proposes to rely.
  1. Will the ombudsman service seek industry and consumer input? Whether or not, and when, the ombudsman service will seek industry and consumer input will depend on a number of factors.  The ombudsman service may decide that its decision-making would be assisted by obtaining industry and consumer input if, for example, the FSA or OFT are unable to become involved or decide not to or past cases are unlikely to be the subject of any regulatory action.  If the ombudsman service decides that additional industry and consumer input is required additional to that from the parties in the particular cases, it will:
    • invite the chairmen of the relevant Financial Ombudsman Service industry liaison group and the Financial Services Consumer Panel to nominate industry and consumer experts who could provide such input; and
    • before reaching a decision on a case, give the parties to the complaint an opportunity to comment on any expert material (or a summary) on which it proposes to rely.
  1. Can the ombudsman service discuss cases with interested parties, such as financial businesses, trade associations or consumer bodies? The ombudsman service is content to explain its general approach as illustrated by past cases and its procedures. But, like the courts, the ombudsman service is constrained by the rules of natural justice when dealing with individual cases. How and when it can discuss case-related issues with interested parties is explained on its website.

What if the issue is about interpreting a point of law?

  1. If the issue raises an important or novel point of law, which has important consequences, the business may ask the ombudsman service to allow the matter to be considered as a ‘test case’ in court rather than determining the complaint. The procedure is described in chapter 3 of the dispute resolution rules (DISP).
  2. Broadly, the business must undertake to pay the consumer’s legal costs of the court proceedings. In considering whether a test case is appropriate, factors the ombudsman service may take into account include:
    • whether the point of law is central to the outcome of the dispute;
    • the significance of the dispute for the business or for its customers or for the sector;
    • the amount at stake in the dispute; and
    • the remedies that a court could impose.