UK lawmakers want answers on departure of financial ombudsman chief

By Kirstin Ridley

LONDON (Reuters) -British lawmakers demanded more answers after being told on Tuesday that the head of Britain's Financial Ombudsman Service (FOS) left by mutual consent and her departure had nothing to do with the handling of motor finance mis-selling cases.

In a tetchy grilling by the cross-party Treasury Committee to discuss the work of the consumer complaints body, Chair Zahida Manzoor repeatedly refused to be drawn further on the circumstances of last week's sudden exit of Abby Thomas after two years in the job.

Tuesday's parliamentary evidence session comes as finance minister Rachel Reeves steps up pressure on regulators and public bodies to ease the burden on businesses to ignite stagnant economic growth.

"We just want to know: Was she pushed or did she jump?" asked Meg Hillier, the chair of the Treasury Committee.

"It was a mutual agreement," Manzoor said. "Abby stepped down and we wish her well."

Following the session, Hillier promptly penned a letter to Manzoor and the Financial Conduct Authority (FCA), which appoints senior FOS staff, saying the circumstances surrounding Thomas' departure "did not appear to be fully shared with the committee".

She laid out a series of questions, ranging from details about any severance payment and whether the FCA had played a role in the departure to whether the board had raised any concern about Thomas's work, and asked for a response by close of business next Tuesday.

Asked during the hearing if she could rule out whether Thomas's departure had anything to do with how complaints about motor finance were being handled, Manzoor responded: "Absolutely. I can rule that out. Yes."

Manzoor, who on Monday also announced her own exit at the end of her second term in August, said there had been no non-disclosure agreement - a gagging clause often used to prevent discussion about job departures - and that any severance payment would appear in the FOS's public accounts.

Reeves has called for a better climate for investment and last year urged the FOS and FCA to improve how they handled "historic market practice and mass redress events" amid industry fears that banks might have to pay tens of billions of pounds in compensation over motor finance mis-selling allegations.

The FOS has been dealing with a fresh wave of consumer complaints after the Court of Appeal ruled last year that it was illegal for banks to pay a commission to a car dealer without obtaining a customer's informed consent.

Resolutions are on ice ahead of a Supreme Court ruling this year.

However, Reeves wants to shield lenders from a hefty bill and ensure a healthy motor finance market.

(Reporting by Kirstin RidleyEditing by Alexandra Hudson)