FOS calls for inquiry focus on consumer trust
Consumer trust in financial services should be at the heart of the financial system inquiry, according to the Financial Ombudsman Service (FOS).
While the financial services industry requires strong systems for support, “it is important to remain aware of the human side to finance – that there are real people with real issues who are affected by the systems put in place”, its submission to the inquiry says.
The inquiry’s recommendations should support “regulation, competition policy and remuneration structures that create the appropriate incentive structures for the creation of relationships of trust”.
When trust is broken there should be strong sanctions and effective external dispute resolution, FOS says.
It urges the inquiry to consider a limited last-resort compensation scheme for consumers, because professional indemnity insurance is not covering losses when providers fail.
Industry codes should be supported and the current dispute resolution process – based on a co-operative, non-adversarial, industry-based approach – should be maintained.
FOS says the codes provide a guide to industry and enhance trust between providers and consumers.
It calls for special attention to measures that assist vulnerable consumers, and adequately funded community financial counselling and legal services.