FOS complaints: stats, trends and lessons

The Financial Ombudsman Service (FOS) has published the latest annual review detailing the range of complaints they received in 2016/2017. Once again it makes good reading for financial advisers. The statistics show that complaints against financial advisers fell again compared to 2015/2016. Of the 321,283 complaints received by the FOS, only 0.5 per cent involved financial advisers which translates to 1,600 complaints, and of those, only 36 per cent were upheld.

What were the complaints about?

• 242 complaints related to self-invested personal pensions ("SIPPs") and 64 per cent of these were upheld. Unfortunately the data indicates that SIPP complaints are showing no sign of slowing down.
• Payment protection continues to make up the biggest proportion of complaints – 52.5 per cent.
• Investments and pensions accounted for 4.5 per cent of complaints with life policies, savings and endowments accounting for 14 per cent of complaints.
• 12 per cent of complaints were about insurance.
• Banking and credit accounted for 31 per cent of complaints and of that figure, and excluding PPI, most of the complaints were about current accounts – 25 per cent.
• The product which saw the biggest increase in complaints was instalment loans.

 What do the stats tell us?

The drop in the number of complaints is encouraging and demonstrates continued strides in the financial adviser profession around better risk management. However, from a brief review of some of the decisions, complaints were being upheld against advisers because of their basic errors

• Failure to record advice. The FOS recently advocated that calls should be taped as they provide "brilliant evidence", particularly when dealing with insistent clients.
• Not updating fact finds. This is particularly common where advisers are dealing with long-standing clients and consider that they know them and their needs. A recent decision about investment advice in 2012 found that no fact find had been completed since 1999.
• Generic advice not tailored to the client. There continues to be a tendency to rely on long suitability reports which too often are not read or digested by the client.
• Failing to set out clearly the advantages and, importantly, the disadvantages of the advice offered. A lot of the decisions referred to the advice as being far too one-sided.

It is a matter of concern that 161 of the complaints were about advice and events that took place over 15 year ago; this again raised calls for a long-stop provision.

There continue to be complaints about inconsistent decisions, with Pimfa (the Personal Investment Management & Financial Advisers Association) monitoring decisions and looking for evidence of inconsistency to present to the FOS. It will come as no surprise that the FOS rejects any such allegation. Caroline Mitchell, the lead ombudsman, stated that they, "make evidence based decisions and don’t apply hindsight." Unfortunately, it appears that the profession continues to disagree with this assertion.

Overall, it is another good set of statistics for financial advisers and their insurers, but as ever there should not be room for complacency.