Banking APPG calls to create financial services tribunal after scandals ‘eroded public trust’
The all-party parliamentary group for fair business banking (APPG) has recommended a creation of a financial services tribunal after a series of high-profile scandals “eroded public trust”.
The cross-party group outlined its recommendation on building a framework for compensation and redress in a new report, which stated that the existing landscape of institutional mechanisms for redress is “fragmented”.
It highlighted that the current system includes the Financial Services Compensation Scheme (FSCS), the Financial Ombudsman Service (FOS), as well as going to court.
The group of politicians suggested that these can be difficult to navigate and often fails to produce fair and reasonable compensation.
According to Ned Beale, partner at law firm Hausfeld, in his foreword said “This report is the UK’s first systematic review of redress and compensation schemes, and the first guide to best practice when schemes are designed and implemented. We should aspire to a world where the requirement for redress schemes does not arise in the first place.”
One of the recommendations was setting up a permanent body to adjudicate disputes in the financial sector, where both businesses of all sizes and individuals would be eligible to participate, would be far more cost effective.
The report explained that a financial services tribunal would be funded by the HM Treasury in the same way as other tribunals. However, it would introduce a small levy on financial services companies to meet
the cost which would require legislation.
The creation of a Financial Services Tribunal is not a new idea, experts told City PM last July that the establishment of this Tribunal could boost the City’s competitiveness.
The tribunal was one of the three recommendations the report suggested. The second was it urges the Government to publish a handbook establishing compulsory guidelines by which any public agency or private firm or organisation must abide when setting up a redress scheme.
Finally, the group recommended the creation of an arms-length body, which could be activated when a scandal emerges, and co-funded by private sector firms responsible for wrongdoing.
The report outlines that the body should be composed of expert panels, to ensure guaranteed independence of judgement, and will be accountable directly to Parliament and regulators.
“Compensation and redress schemes are vehicles deployed to remedy the most sensitive problems in financial services. They must bear heavy loads. These include delivering justice for large groups of consumers and resolving complex legal claims without court proceedings,” Beale highlighted.