Mind the Consumer Protection Gap: the UK Financial Ombudsman Service, Fairness and Reasonableness, and the Law

Developed by reference to the UK Financial Ombudsman Service (FOS), this chapter provides a new framework to manage the relationship in consumer alternative dispute resolution (CADR) between legal rules and fairness and reasonableness principles. The framework gives fairness/reasonableness a distinct role from legal rules. It holds that fairness/reasonableness should be used to benchmark the legal rules, to determine whether the law achieves substantively fair outcomes for consumers, or whether there is a ‘consumer protection gap’ either because there is no legal rule at all or the rule in question does not provide sufficient substantive protection for consumers. Fairness and reasonableness should then be used to close the gap to provide substantive fairness. Using the case study of authorised push payment fraud, the chapter shows that the FOS is inconsistent in following this framework. Thus, the conclusion emphasizes the feasibility, importance, and transferability of the framework as well as its relevance for consistency and predictability.