The head of the Financial Ombudsman Service (FOS) has effectively been forced out of the role after losing the confidence of its board amid growing government pressure on economic watchdogs.
Sky News understands that Abby Thomas, whose departure was announced earlier on Thursday, was at the centre of several disputes with fellow directors over issues including the introduction of a fee for claims management companies (CMCs).
Britain’s banks and insurers have long argued for a fee to be imposed on CMCs that would deter spurious ambulance-chasing, with the FOS proposing last May to establish a £250 charge.
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Industry executives said that Ms Thomas had argued for a much lower fee – said to be as low as £25.
Ms Thomas, who joined the FOS less than two-and-a-half years ago as chief executive and chief ombudsman, is said by insiders to have lost the confidence of the organisation’s chair Baroness Manzoor.
The prime minister, chancellor and business secretary have been intensifying pressure on regulators in recent weeks as they search desperately for ways to kickstart growth in the economy.
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That pressure resulted in the ousting of the Competition and Markets Authority chairman last month, and one bank executive said that Ms Thomas’s exit – while not directly instigated by ministers – was a reflection of the same mood.
Rachel Reeves, the chancellor, recently moved to intervene in the car loan providers legal action which threatens to saddle lenders with compensation bills running to many billions of pounds.
In its statement on Thursday, the FOS – which is operationally independent but handles complaints according to rules published by the Financial Conduct Authority (FCA) – noted simply that Ms Thomas was “stepping down”.
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The FCA also appoints FOS board members, and its chair with the approval of the Treasury.
“Interim arrangements will apply with the Deputy Chief Ombudsman, James Dipple-Johnstone, covering the Chief Ombudsman role and the Chief Finance and Risk Officer, Jenny Simmonds, covering the Chief Executive role,” the FOS said.
Baroness Manzoor added: “On behalf of the board and the executive, I would like to record our thanks and wish Abby every success in her future career.”
Ms Thomas said: “It has been an absolute privilege to lead the Financial Ombudsman Service through this period of rapid transformation and innovation.
“I am immensely grateful to the entire Ombudsman team for everything that they do to support our customers and build confidence in the financial services industry.”
A spokesperson for the FOS said it would not comment beyond the statement on its website.
Ms Thomas could not be reached for comment.
