Institute questions whether the regulated community is being treated fairly
The Institute of Insurance Brokers (IIB) has responded to Lord Hunt's review into the Financial Ombudsman Service (FOS).
The IIB said: "The IIB anticipated before NGI day (January 2005), complaints made to the FOS concerning general insurance mediation, in particular arising from advising upon and arranging contracts of insurance, represent an extremely small (almost insignificant) proportion of the total number of policies effected through brokers and other intermediaries every year. Furthermore, the IIB understands that of the relatively small number of complaints which progress to a full investigation, the majority are not ultimately upheld."
The IIB went on to say that in its experience, as far as general insurance is concerned, consumers are made aware of their right to refer complaints to the FOS in Terms of Business Agreements (TOBAs), policy documentation and specifically in writing (under FSA rules) from an intermediary when a complaint is made to a firm.
A spokesperon said: "Therefore, the IIB does not consider there to be any problem with awareness or accessibility whatsoever from a broking perspective."
The IIB also questioned the application of justice given that the FOS was established from what were previously independent voluntary arrangements, such as the Insurance Ombudsman, but has now been made compulsory.
"The Ombudsman can go beyond the established laws (of contract and tort) and their precedents and make a substantial award against a broker, on the grounds that he considers it to be ‘fair and reasonable’, there is no right to a hearing, no opportunity to cross-examine the complainant, no right of appeal and to add insult to injury the broker pays for the investigation, even if ultimately found completely innocent of any wrong doing," said the IIB.
IIB director general, Andrew Paddick, added: “I have always found the FOS officials and staff to be very pleasant and honourable people, who do endeavour to be fair and reasonable, but natural justice in a civilised society is another matter altogether and with regard to the FOS remit it is something the politicians have constantly fudged, preferring instead to discriminate in favour of consumers, including those who are habitual complainers of no substance. The rules need looking at in the context of mandatory membership and this is something I expect Lord Hunt (as a lawyer himself) to address.”
