The Financial Ombudsman Service is a public body set up by Parliament. We carry out statutory functions on a non-commercial, not-for-profit basis.
The "body corporate" that administers the ombudsman scheme as the "scheme operator" (under s225 of the Financial Services and Markets Act) takes the form of a company "limited by guarantee and not having a share capital". This company is called the Financial Ombudsman Service Limited. The powers and functions of the scheme operator are set out in company's legal constitution:
The scheme operator has a board consisting of six directors – including the chairman. They are appointed by the Financial Conduct Authority (FCA) under the Financial Services and Markets Act 2000. The chairman of the board is appointed by the FCA with the approval of the HM Treasury.
These directors (or board members) are "non-executive" – they are not involved in considering individual complaints. Their job as "public interest" directors is to take a strategic overview and ensure that the ombudsman service is properly resourced and able to carry out its work effectively and independently.
The rules setting out how the Financial Ombudsman Service (and businesses) should handle complaints are published as part of the FCA's Handbook – in the section called Dispute resolution: complaints.
Parliament gave the power to make these rules to the regulator and to the board of the Financial Ombudsman Service. Our board exercises this power to make rules by approving official legal documents called "instruments".
The legislation and rules show the close "constitutional" relationship between the Financial Ombudsman Service and the regulator, the FCA. In operational terms, the relationship between us and other official bodies is set out in a number of formal documents.
The memoranda of understanding between the ombudsman service and these official bodies reflect the fact that, while each of us is operationally independent and has a distinct role, we need to cooperate and communicate to carry out our functions effectively.
There are procedures in place for ensuring cooperation between us and the regulator on issues that might lead to large numbers of complaints, including a senior-level co-ordination committee.