I was pleased to be a Member of the Commerce & Employment Board that put forward the successful report into the creation of a Financial Services Ombudsman at the December 2013 States meeting. Due to the large amount of reports going through the States at the end of the year, this had been delayed for 2 months. However, we got there in the end and the report was passed. My speech is below.
Sir, this has been a long time coming. The need for a financial services ombudsman has been talked about for decades.
That could be explained by the view that Guernsey has such strong financial services regulation and it would mean extra cost without any perceived benefit.
Indeed, I have to say that for many years, as someone working in the finance industry I did question the need of a financial services ombudsman and whether the industry should have to pay more on top of rising licence fees.
However, if, like me, you have been contacted by a parishioner who tells you that the money they had put aside and invested for their retirement had been mismanaged and that they could not afford a lawyer to fight their case without using up the funds they had left and with no guarantee they would win, you will realise why it is essential we have such an Ombudsman in Guernsey.
According to the UK FSO website, 9 out of 10 people say they have no complaints about their bank, insurer or financial services firm and most financial transactions take place without any problems.
But, sometimes things go wrong and sometimes the financial services business does not sort things out to the customers satisfaction. It is then that the FSO can help out.
That the GFSC provides no support here was evidenced by my parishioner who was told to go to an Advocate. Great, but they don’t come cheap. I believe bringing in an FSO will make the former give more attention to the retail side of financial services, rather than the institutional focus that it has had to date. At the same time the proposals take into account concerns from industry that the need for an FSO to cover all aspects of the financial services sector, such as Class B funds aimed at institutional investors, is unnecessary.
This is about protecting those people who aren’t rich sophisticated investors with enough capital to fight their case through the courts. This is about helping those people we should be supporting those who carefully save throughout their working life to pay for their retirement but would not be considered wealthy by any stretch of the imagination. These are people who have taken responsility for their own lives trusting in professionals to invest their money wisely. These are people who won’t be a burden on society, and we have a duty to ensure that they have some level of protection. At the end of the day this will save us money.
The G20 High Level Principles on Financial Consumer Protection , adopted by the Organisation for
Economic Cooperation and Development in October 2011, include –
Jurisdictions should ensure that consumers have access to adequate complaints handling and redress mechanisms that are accessible, affordable, independent, fair, accountable, timely and efficient. Such mechanisms should not impose unreasonable cost, delays or burdens on consumers. In accordance with the above, financial services providers and authorised agents should have in place mechanisms for complaint handling and redress. Recourse to an independent redress process should be available to address complaints that are not efficiently resolved via the financial services providers’ and authorised agents’ internal dispute resolution mechanisms. At a minimum, aggregate information with respect to complaints and their resolutions should be made public.
Whilst there will initially be costs that will be spread across industry, which is not ideal, I believe this is the necessary approach to take before we build up a good enough picture of who the most complaints are directed at and making sure those are the businesses that pay.
And whilst I am probably one of those who is more sceptical than others about to how far we can work with Jersey, I do believe that this is one example of where sharing the service will keep costs down, and that we should be working with our sister Island to reduce the burden on industry.
So, I urge Members to support this report to help to support improvements and reduce disputes; help financial businesses themselves to resolve disputes with consumers; resolve any consumer disputes that financial businesses fail to resolve themselves; and reduce the burden on the courts.