Ombudsman Scheme
99.Sections 59, 60 and 61 extend the jurisdiction of FOS established under Part 16 of FSMA, to hear complaints involving licensed persons under the 1974 Act. It provides for the detailed operation of the new consumer credit jurisdiction to be determined largely by rules made by FOS on which it is required to consult in accordance with the requirements of Schedule 2. A contravention by a licence-holder of any provision relating to the consumer credit jurisdiction may be considered by OFT in determining that person’s fitness to hold a licence (see the notes on Section 29 above).
Section 59: Financial Services Ombudsman scheme to apply to consumer credit licensees
100.Section 59 inserts a new section 226A into FSMA introducing the new consumer credit jurisdiction and will require holders of standard licences under the 1974 Act (and persons authorised to wind up a licensable business under new section 34A inserted by section 32 of the 2006 Act) to submit to the jurisdiction of the scheme. The Secretary of State may bring within the consumer credit jurisdiction types of business for which a licence is required under the 1974 Act. The scheme operator may make rules to describe the complaints it will and will not deal with under the jurisdiction it has been given. For example, if the Secretary of State was to apply the jurisdiction to “consumer credit businesses”, FOS could consider (among other things) acts or omissions relating to advice on credit, the making of agreements, or the administration of accounts. The section sets out the circumstances in which a complaint can be dealt with: namely, that the complainant meets the relevant eligibility criteria (set by the new section 226A) and wishes for FOS to consider the case; that the complaint falls within a description specified by FOS in its consumer credit rules; and that the business being complained about falls within the remit of the consumer credit jurisdiction. Finally, if the complaint can be dealt with under FOS’s existing compulsory jurisdiction it will not be dealt with under consumer credit jurisdiction (e.g. a complaint involving an FSA authorised firm engaging in consumer credit activity will be covered by FSA’s rules under section 226 of FSMA, rather than FOS’s rules under section 226A).
101.Section 226A(7) makes provision for the making of rules in relation to the consumer credit jurisdiction by FOS. Such rules must be approved by FSA.
Section 60: Funding of ombudsman scheme
102.Section 60 prescribes the funding arrangements for the new scheme. It provides for FOS to levy fees on licensees to meet both the costs of establishing the consumer credit jurisdiction of the Ombudsman scheme and the costs of running the consumer credit jurisdiction. They may also include a fee to cover the costs of collection.
Section 61: Consequential amendments relating to ombudsman scheme
103.Section 61 makes consequential amendments to the 1974 Act and FSMA in relation to the ombudsman scheme, including inserting reference to the consumer credit jurisdiction where appropriate. Section 229 of FSMA is amended to allow FOS to specify a maximum limit for compensation that can be awarded under the consumer credit jurisdiction. Section 353 of FSMA, which relates to powers to allow the disclosure of information, is amended to allow the Ombudsman to disclose information about cases and decisions to OFT to assist or enable OFT to discharge its licensing functions under the 1974 Act.
