Schedule 2 - Part 3A of Schedule 17 to the 2000 Act
Consumer Credit Bill
5:30 pm
Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)
The fees for the ADR will make it work and will cover the costs of the scheme. It will be possible, I think, for the first two cases to be free for businesses, but the fees relate to the cost of the overall scheme.
The overlap with the courts can arise in two ways. First, the consumer might want to make a complaint to the FOS, but the firm might start court proceedings. Where the court considers it appropriate, it can stay those proceedings while the consumer makes the complaint to the FOS. Secondly, the complaint might be taken straight to the FOS, but the ombudsman might consider that the courts would be better suited to deal with it. However, the FOS can informally discuss things and try to reach an informal arrangement. It can also decline to deal with a case if it involves a third party over which it has no jurisdiction or if the complaint appears to be solely about the legitimate exercise of a firm's commercial judgment in setting an interest rate and it would be more appropriate for the court to consider the rate-setting on the basis of expert evidence.
In general, there is no prescribed mechanism for how the FOS and the courts will work together in practice, but we anticipate that they will co-operate and complement each other. The idea is to have an informal set of circumstances before the case proceeds to the formal FOS decision. If the FOS cannot deal with the case, it can go to the court. Equally, the court can refer an issue to the FOS.
That is a good way of dealing with these difficult situations. The process will not be off-putting for consumers, because most things will be in writing, and their representatives can be involved. That is a good way of trying to resolve difficulties within the context of the Bill's overall aim of achieving greater transparency, with pressure on lenders to lend responsibly and on people fully to understand their rights.