News:Twenty five years ago
Twenty five years ago, if any financial services firm had been asked whether they foresaw regulation as being a positive thing, I think we can all assume that the answer would have been a resounding no.
Why? Because with rules and regulation comes a loss of control and extra costs, for what many would argue is no good reason at all.
Whether or not today's situation was foreseen, the regulatory system to which the financial services industry is now firmly attached, whether voluntarily or not, is here. Whether it is to stay or go, however, remains to be seen.
Heavily against the regulator is the recent Northern Rock debacle, which has seen the FSA come under fire from almost every perceivable direction and, one might add, with justification. That, so to speak, however, is just the tip of the iceberg.
When LordWoolfof Barnes was commissioned to overhaul the civil justice system it was in recognition of the fact that the pre-existing system was not just failing to meet the public's needs, it was failing miserably.
Lord Woolf's recommendations incorporated fundamental principles into the 'new' system which was designed to: be just in terms of its results and fair in its treatment of disputing parties, offer appropriate and reasonably priced procedures, use reasonable speed to deal with cases while being understandable and responsive to users' needs and provide as much certainty on a case-by-case basis as possible. On the back of Lord Woolf's recommendations came the new and improved Civil Procedure Rules, which came into effect in 1999 and which made it an overriding requirement that parties be encouraged to attempt alternative dispute resolution.
In recognition of the monumental task at hand, however, Lord Woolf was quick to point out that "ADR will only work well if mediators are up to the job. There is nothing going to turn people off from ADR more quickly than if they have mediators who do not know what is involved in conducting mediation properly". By this time N2 was fast approaching and along with it the 'birth' of the Financial Services Authority, a new financial services super regulator, with its own 'expert' body for resolving disputes in the financial arena, the Financial Ombudsman Service.
But how, one asks, does this fit into Lord Woolf's newly reformed civil justice system? In short, it does not.
Such comments are not made lightly. But on what grounds can a dispute resolution service that charges only one party to the dispute a case fee, whether that party wins or loses, be fair or just? An argument could be made that this could be acceptable if the firm who bears such costs chose to submit to the 'jurisdiction' of the FOS.
But a large number do not. Furthermore, on what grounds can a firm that professes to resolve disputes quickly, with one of its overriding objectives for creation to provide speedy resolution, continue to make such a statement in the knowledge that, despite its efforts admittedly, some complaints have waited for more than four years for 'expert' determination.
And, on what grounds can an organisation that refuses to publish its outcomes be said to add certainty to the provision of any form of justice or compete with the courts which, for all their failings, nonetheless publish their decisions so society can regulate its actions accordingly?
Can a service that operates on the basis of the principles above be said to realistically give effect to any form of justice? For consumers yes. For firms? Arguably not.
During my MA in law, specialising in ADR at Westminster University, I was fortunate to receive training on the principles of ADR - introduced to the UK initially in 1990 by the Centre for Effective Dispute Resolution - by, among others, James South, the director of training.
The application of these principles which have led the Centre for Effective Dispute Resolution to top the ratings as the largest and, arguably, most prestigious ADR provider in the UK and Europe were, and are, held in such esteem that the Centre for Effective Dispute Resolution also trains members of the English judiciary, while Lord Woolf himself acts as special adviser to the organisation. It is to this organisation that I turn in June 2008 to take their specialist vocational training as a professional commercial mediator.
The Centre for Effective Dispute Resolution qualified mediators, including barrister, international commercial mediator, facilitators and high profile names including Lord Woolf himself may be said to come highly qualified for their role. Judges, as a matter of course, have about six years of academia behind them and many years of practice in any number of specialisms before being appointed a member of the judiciary. Members of both bodies proudly proclaim their qualification, which of course lends itself to engendering confidence and trust in those they are there to assist, as do I.
And FOS employees? What specific skills do they have and what do they say about their qualifications? Some adjudicators bring years of experience, admittedly, with some ombudsmen having worked in professions including law and insolvency. However, those firms who ask of their adjudicators in particular what qualifications they have are invariably met with 'my qualifications are irrelevant. I am perfectly entitled to do what I do because I work for FOS'.
Is this arrogance? No, I think not. Is it more likely than not that adjudicators, in particular, are not permitted by Fos to divulge their qualifications because the industry might find them lacking which would only further hinder an organisation already facing an uphill battle trying to get firms to 'accept' their jurisdiction? Arguably yes. It takes skill, expertise and, above all, training to be a good mediator. The principles underlying ADR can be learned from a manual. But if asked whether any such training is given to FOS mediators or arbitrators, the answer is, with nothing to suggest otherwise, no.
Anyone could be forgiven for assuming that an organisation that proudly proclaims: "We do not .... pretend to find the law. We unashamedly make new law" considers itself 'above' the law and, of course, these other 'lesser' principles of ADR and justice. But I forgive the Fos and the FSA, which have got a little 'above' themselves, with the Northern Rock debacle and the judicial reviews of Fos decisions suggesting a consensus that they are perhaps not competent to exercise those powers. It was Parliament that erred when it conferred powers on these bodies. As such, it does not appear to be a question of whether Parliament will remove these powers, but when. Until then, although accessing justice for you firms may be more difficult there are those of us out there that can help.
Jane Sanders is company director of MLP Compliance Solutions
Article last updated: Nov 13, 2008
