1 in 10 complaints received by FOS is made against IFAs

The Financial Ombudsman has revealed that approximately one in ten of the increasing amount of complaints made to their service relate to advice handed out by independent financial advisers.

According to the FOS' 2005 annual report 90,908 of cases resolved in the year to March 31st 2005, life insurers and investment product providers got the most complaints. They made up 42% of the complaints by sector, followed by 31% against banks and 13% against IFAs.

Mortgage and general insurance intermediaries are linked to merely 2% of complaints; however they have only recently been included under the FOS regime.

More than 600,000 enquiries are annually received by phone and written correspondence by the FSO, it usually can deal with enquiries at an initial stage either by providing required information to put right any misunderstanding consumers may experience over product terms, deal with plain misunderstandings, or find an informal solution.

Over (50,000) of all cases settled this year were managed informally through 'guided mediation'. Another 34,434 cases were completed through adjudication – a third of which (36%) the FOS deemed the firm had not dealt with the customer’s complaint in a fair manner.

Similarly, just 7% (6,470) were determined by the final decision of an ombudsman and a third (32%) of cases also discovered the consumer’s complaint had not been handled reasonably by the company.

Nearly, two-thirds of all complaints made now relate to endowment mis-selling claims, states the FOS, in comparison to last years figure, when they accounted for half of all complaints. There is a rise in clients complaining after the time-bar deadline has passed time-bar deadline has passed and subsequently more are appealing to the Ombudsman about time-barred cases.

The FOS highlighted that a considerable number of enquiries and complaints received by them over endowment compensation are made because clients do not comprehend the reason why the compensation sum offered does not concur with the proposed shortfall the endowment provider has suggested.

Two-thirds of grievances about IFA advice related to mortgage endowments, while a further 22% related to other investments and 8% were about pension advice

The FOS has also held discussions with claims management companies dealing with endowment complaints about the importance for firms to "adopt good practice" also highlighting the need for regulation of claims management firms when managing services of a financial nature.

The FSO reinforces the fact that its assessment procedure is very thorough. It believes in the importance of considering the clients approach to risk, together with hard evidence available at period of sale. It also examines the client's circumstances as a whole.

Jul 1, 2005
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