Financial Ombudsman board dismissed CEO after ‘fundamental disagreementsʼ

Abbey Thomas was dismissed from her role as chief executive of the Financial Ombudsman Service (FOS), the Treasury Committee has said in a report published this morning.

Thomas was announced as having “stepped down” from her CEO post in February. However, in its report, the committee concluded she was dismissed after the FOS board lost confidence in her, following fundamental disagreements on a broad range of issues.

In its report, the committee also took the unusual step of criticising FOS chair Baroness Manzoor for initially refusing to answer its questions about Thomas’s abrupt exit.

At an evidence session on February 11 — some five days after Thomas’s departure was announced — the committee asked Manzoor if it had had anything to do with the FOS decision to uphold two complaints about the sale of motor finance policies. That decision triggered a wave of actions by both the Financial Conduct Authority (FCA) and the courts.

Today’s committee report makes clear, however, that “no single event or topic” led to the “collapse in confidence” that prompted Thomas’s dismissal.

“We observed that fundamental disagreements about FOS strategy, management and operations between, on the one hand, Abby Thomas and, on the other, the FOS board and chair, led confidence to collapse on both sides,” the committee said in the report.  

Contempt of parliament

During the February hearing, Treasury Committee chair Dame Meg Hillier warned Manzoor that refusal to answer the committee’s questions could be contempt of parliament.

This morning, Hillier said the committee was “deeply disappointed” at how the FOS senior leadership team had handled answering its questions.

“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,” Hillier said.

According to the report, Manzoor wrote to the committee in her capacity as FOS chair on February 19, stating that, as a member of a House of Lords, she “cannot be required either to attend before the committee, or to answer its questions”.

Members of the House of Lords cannot be compelled to answer questions by the House of Commons, but the committee said her refusal was “unnecessary and disrespectful” as its questions were not related to Manzoor’s role in the upper house but rather to her chairmanship of a public body.

Manzoorʼs actions forced the committee to use its powers of compulsion on the FOS, ordering it to hand over: minutes of board meetings, and informal notes from the board meeting that preceded Thomas’s dismissal; the terms of her severance package; any confidentiality or non-disclosure agreement that may have been signed by Thomas and the FOS; as well as any payoff she received.

The FOS complied with the order.

The committee’s report reminded members of the House of Lords who take on leadership roles at public bodies that they must accept “such roles come with House of Commons scrutiny”.