The departure of the former Financial Ombudsman Service chief executive was due to a “collapse in confidence following fundamental disagreements with the board on strategy, management and operations”.
That is the view of the Treasury Committee’s latest report, which looked into Abby Thomas who left her post at the disputes body suddenly earlier this year.
The Financial Ombudsman Service, like several regulators, is under pressure to relax regulations to fall in line with the government’s growth agenda.
However, the committee turned its fire on Financial Ombudsman Service chair Baroness Manzoor, who it said was “disrespectful” when she “refused to answer questions on the departure of the chief executive” when she appeared before the committee in February.
MPs said: “Baroness Manzoor told the committee that she cannot be required to answer the committee’s questions due to her Membership of the House of Lords.
The committee added that “this assertion was unnecessary and disrespectful, concluding that any Peer who accepts a leadership role in a public body must also accept that such roles come with House of Commons scrutiny”.
Treasury Select Committee chair Dame Meg Hillier said: “I’m afraid that the handling of this situation by the senior leadership of the Financial Ombudsman Service has been deeply disappointing.
“The attempt to frustrate a House of Commons Committee from scrutinising the actions of a publicly accountable organisation ultimately proved unsuccessful.
“I hope this sends a clear message to any organisation considering similar action in future that Members of the House of Commons will have answers to the questions they ask on behalf of the British public, whether senior officials attempt to block them or not.”
Baroness Manzoor added: “I highly value the Treasury Select Committee and the important role it plays in holding the financial sector to account.
“I am committed to providing open and transparent evidence to the committee, but there are rare instances when that can be difficult – particularly when it relates to employment matters.”
Baroness Manzoor will leave the body on 1 August after completing two terms in office over six years.
Day-to-day operations at the Financial Ombudsman Service are led by interim chief ombudsman James Dipple-Johnstone and interim chief executive Jenny Simmonds.
Last month, UK Finance said that the Financial Ombudsman Service should be stopped from acting as a “quasi-regulator” and insisted on a timetable of reform for the body.
The Treasury is currently reviewing the remit of the agency, which resolves disputes between financial firms and consumers, in a move that was first announced in the spring.
In June, the Financial Ombudsman Service opened a consultation on lowering the payouts it directs firms to hand over to consumers.
The study will look at cutting the interest rate applied to compensation handed down against firms that have lost cases to customers.
In February, City firms that have customer complaints against them rejected will get a rebate of more than 25%, while claims management companies will be charged for the first time to bring cases to the Financial Ombudsman Service.
Thomas became the fourth head of a regulator to suddenly leave her post, also in February, after the Chancellor warned of the danger of rep tape stifling growth in the City at her keynote Mansion House speech last November.
In January, former Amazon UK head Doug Gurr was installed as interim chair of the Competition and Markets Authority after Marcus Bokkerink left suddenly, after just over two years in the role.
