IFA hits out at Fos over after-death claims
Aifa emphasises need for long-stop as ombudsman confirms claims could be taken from deceased advisers before estates are dispersed.
Former financial adviser and IFA campaign group founder Evan Owen has launched a fresh attack on the Financial Ombudsman Service over rules that mean it can seek to recover compensation for claims even after an adviser’s death.
Fos confirmed to FTAdviser that depending on the arrangements of an IFA business, it is possible it would look to take compensation from an adviser’s estate before the estate is dispersed.
This may be more likely to happen to deceased advisers from one-man-band companies, whereas with larger firms the responsibility could be passed on to the still-living advisers depending on the terms of business.
Evan Owen, regulatory consultant and former IFA appointed representative at DBS Financial Management, is openly critical of the Fos.
He said: “If you’re dead and your estate hasn’t been dispersed they can still get you. All you have got to consider is, is it fair and reasonable for an 80-year old to have to consider claims when he is on his death bed?
“I don’t think anybody knows how bad it is apart from me and about 600 others.”
Chris Hannant, policy director at the Association of IFAs, said this “highlights the need for a fair cap on liability”.
He said: “It’s perfectly reasonable that the consumer has a right to complain, but it’s also reasonable that this doesn’t go on forever and there needs to be a limit.
“The law is if you bring a claim before a court the statute of limitations brings a 15 year limit. The Financial Services Authority decided it knew better than Parliament and decided not to have a cap.”
Duncan Philp, senior consultant at IFA firm Macbeth Currie, said although he has not heard of such a case he understands that it is possible for Fos to recover compensation from deceased advisers.
He said: “It may well be that if someone is a sole operator and there was an ongoing investigation they could try to reclaim it from their estate, but they would probably have to go to court to get that.”
He added: “We always understood that if somebody dies there isn’t much people can do.”
A spokesperson for the Fos acknowledged it was possible for a claim to be taken from the estate of a deceased adviser, but said: “If a business is not longer trading, a consumer can still ask the ombudsman to look at their complaint under certain circumstances.
“However, the responsibility for paying any redress awarded by the ombudsman is entirely dependent on how the financial advisers set up their business.”
Mr Owen previously criticised the Fos policy of requiring payments from firms regardless of whether a claim is upheld or not.