Financial Ombudsman Service to cover consumer credit disputes from April 2007
16 June 2006
consultation launched on new complaint rules that will apply
The Financial Ombudsman Service has today issued for public consultation a set of draft complaints rules that will apply to businesses with consumer credit licences who will be covered by the ombudsman for the first time from April 2007.
This follows the announcement last month by the department of trade and industry of plans to implement the new consumer protection framework under the Consumer Credit Act 2006. Under this new legislation, businesses with consumer credit licences - who are not already covered by the Financial Ombudsman Service - will be required by law to have formal complaints procedures. These procedures will include telling customers about their new right to take an unresolved dispute to the ombudsman.
The consultation document published today:
- introduces the ombudsman service and the complaints-handling requirements to the consumer credit sector;
- explains the technicalities of the ombudsman's remit over consumer credit disputes (officially known as the ombudsman's "consumer credit jurisdiction");
- invites feedback on key issues - such as how the ombudsman service will be funded for this work; and
- includes the draft rules for handling consumer credit complaints (amending the existing rules contained in the "DISP" section of the Financial Services Authority's Handbook).
The consultation period runs till 11 October 2006 with publication of the final rules planned for January 2007. During this period, the ombudsman service will be working closely with the consumer credit sector and its trade bodies - as well as other stakeholders - to explain what the new arrangements will mean in practice and how businesses can plan in advance for the changes.
notes for editors
- Under the Consumer Credit Act 2006, the jurisdiction of the Financial Ombudsman Service will be extended to cover businesses holding a consumer credit licence issued by the Office of Fair Trading (OFT). This means that from April 2007, the ombudsman service will be able to deal with complaints relating to: consumer credit, consumer hire, credit brokerage, debt-adjusting, debt counselling, debt collection, and operating as a credit reference agency. From October 2008 the ombudsman's consumer credit jurisdiction will also cover debt administration and the provision of credit information services.
- The Financial Ombudsman Service already covers 26,000 firms providing financial products and services, ranging from motor insurance and spread-betting to mortgages and pensions. These firms include banks and building societies who provide over two thirds of all consumer credit (by value) - and who are already covered by the ombudsman for consumer credit disputes about, for example, credit cards, personal loans and overdrafts.
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