FOS report large increase in complaints against IFAs

An acute increase in the amount of endowment mis-selling complaints involving independent financial advisers has been noted by the Financial Ombudsman Service.

The FOS expects to see a significant increase when actual figures are released for the current year, compared to last years figures when 13% of all endowment complaints concerned IFAs. Claimants who took out endowment mortgages through IFAs say in their experience it is more difficult to claim compensation compared to those who dealt with banks and insurers. Claimants find that the IFA is either hard to find or will not take responsibility for any mis-selling.

A spokesman for the FOS stated that as it is a difficult task to initially trace the IFA, the tendency is to see complaints relating to IFA s coming in at a later stage. 'The client may also have their grievances dealt with by insurers; this often results in feeling swamped by all the legal complications before the case reaches the FSO.

Therefore, the FOS has needed to set aside extra resources to cope with IFA connected complaints.

Endowment complaint handlers also confess that because of the problematic nature of the case they are hesitant to work with homeowners who have been sold products through IFAs.

The Financial Services Authority remind clients that it is possible to search for their IFA by initially checking its data base online to confirm whether or not they remain registered and still in business.

The FSO have procedures to follow if the company has remained in business; they can deal with the enquiry and advise on the guidelines set out by the FSA.

However if the business is no longer operating since the policy was taken out have, consumers can seek compensation through the Financial Services Compensation Scheme. The scheme will deal with cases going back to August 1998 and will pay out compensation to £48,000.

This year £9.3m in endowment compensation is likely to be paid out, a rise from the £6.7m paid out to claimants last year.

Aug 23, 2005
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