The Lord Hunt of Wirral MBE
Chairman, Financial Service Division
Beachcroft LLP

25th January, 2008

Dear Lord Hunt,

Your Review of the Financial Ombudsman Service

I make this submission to your Review on behalf of EMAG - the Equitable Members Action Group (www.emag.org.uk) – of which I am a board member.

For several years we have been concerned by the behaviour of the FOS in relation to complaints about the Equitable Life Assurance Society (EL), following the latter's substantial cuts to savings and annuities from 2001. Most of our concerns relate to the manner in which the FOS reached its decisions, as well as the decisions themselves, and are therefore not relevant to your review. However we are also concerned about the manner in which the FOS has treated many complainants, and this falls squarely within the remit of your review. As you write on the Home page of the Review's website:

“Much of the focus of this independent review will be devoted to that last question: how to ensure that the FOS is as open, approachable and user-friendly as it can reasonably be expected to be; and also that it sets reasonable expectations of what it can do and what it can't do.”

Our submission deals firstly with the report that we commissioned from Lord Neill and submitted in 2007 as evidence to EQUI (the European Parliament's committee of enquiry into EL - www.europarl.europa.eu/comparl/tempcom/equi/default_en.htm).

Lord Neill is an eminent QC and former Chairman of the Committee on Standards in Public Life. The relevance of his report, both to our concerns about the treatment of complainants and your review, is clear from his opening sentence:

“I have been asked by the Equitable Members Action Group (‘EMAG’) to review the nature of the service provided by the Financial Ombudsman Services (‘FOS’) to some of the complainant Policyholders who were affected in one way or another by the manner in which the Equitable Life Assurance Society (‘EL’) carried on its business in the 1980s and 1990s....”.

Lord Neill's report is No 83 on the list of written submissions on the EQUI website, and an “executive summary” of it is No 86.

Also on the list of written submissions to EQUI are other documents relating to the FOS that form part of our submission. They are

87 A response from the FOS to EQUI

90 An exchange of letters between EQUI and the FOS

91 & 91 Letters from EMAG to EQUI

If there are any other documents, to which allusion or reference is made in those already cited, which you might wish to see, please let us know. Recognising the considerable quantity of material already submitted to the Review by others we did not wish to burden you and your colleagues unduly.

In this context, and bearing in mind your interest in the user-friendliness of the FOS for vulnerable groups, please note that many EL policyholders were already of pensionable age when their savings were cut by Equitable, and the With-Profits annuitants (probably the worst hit of all) were by definition already drawing pension benefits. Although you do not mention them specifically the elderly are widely considered, not least by departments of Her Majesty's Government, to be a vulnerable group and we hope that you will also consider them as such.

Secondly our submission concerns, briefly, two matters relevant to your review – the acceptance by the FOS of group (or class) actions, and the bringing of the FOS within the scope of Freedom of Information legislation.

Group actions. We consider that the FOS could have treated EL-related complaints much more efficiently, and therefore the complainants more rapidly and equitably, had it grouped many - if not all of - them together. We made this point to the Chief Ombudsman but he either could not, or would, not take this course. We ask you to consider the possibility of enabling the FOS to do so in the future.

Freedom of Information. Our experiences with the FOS have convinced us that it should be made subject to the Freedom of Information Act 2000. Of course files relating to individual complaints should not be accessible to FOI requests; but documents concerning, for example, FOS policy decisions, FOS performance, and exchanges with the body that funds it (the FSA), should be open to the same rights of access under the FOIA as those in other public bodies serving the public good.

You are perhaps aware that the Ministry of Justice is currently seeking views on extending coverage of the FOIA - see www.justice.gov.uk/publications/cp2707.htm. We intend to make a detailed submission re the FOS, and will copy it to you shortly.

Meanwhile we would be grateful if you could acknowledge receipt of this submission.

Yours sincerely,

Christopher Carnaghan
Director of EMAG Ltd

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK.
Registered address: Camburgh House, 27 New Dover Road, Canterbury CT1 8DN