If the latest statistics are to be believed, we are becoming a nation of financial whingers.
Correcting wrongs is always a good thing, but I can not help wondering if the financial complaints culture has gone too far and risks undermining the benefits of good financial advice and good financial products by encouraging inflated and sometimes spurious claims.
The latest proposals from the FCA to name firms under investigation gives me little comfort the pendulum is swinging back into balance.
First, it is worth looking at the number of financial grumbles. According to the FCA, the number of complaints about financial services actually fell by 500,000 between the second half of 2013 and the first half of 2013. That is positive, but the drop was most likely due to a decline in the flood of complaints about PPI and banking and the total itself was still huge.
The FCA says that there were 2.9m complaints made in the first half of 2013, with a whopping £2.5bn paid in redress. In other words, in one six-month period alone approximately 1 in 20 people in the UK submitted a financial complaint.
By now the UK’s financial services industry should have a reputation just below that of the average pickpocket and yet the vast majority of us still carry on seeing our financial advisers, saving with the banks and taking out mortgages. Something is not right.
Complaining has just become a way of life for some and a vast industry has grown up dealing with complaints, a cost we all have to shoulder through higher premiums, endless disclaimers and absurd red tape when we want to invest or save.
Now the FCA wants to use new powers to name companies under investigation, not just those who have been found guilty and punished. Most defendants in criminal cases are named, so why not financial providers and advisers, goes the logic.
How many more people will be tempted to complain, knowing the threat of publicity will be enough to force a provider or adviser to back down?There may be some sense to this, but it risks introducing yet more ammunition for the “let’s find something to complain about” sector. How many more people (or rather claims companies) will be tempted to complain, knowing the threat of publicity will be enough to force a provider or adviser to back down and send a cheque whether a complaint is genuine or not – and many are not.
Ultimately, consumers have to take some responsibility for their purchases. If some of the complaints are to be believed, no-one ever reads the small print, providers are greedy vultures, advisers are just a stone’s throw from the criminal fraternity and no consumer really understands the financial product they are buying. Nonsense, of course.
Is it also sensible that millions of us are being routinely disturbed by an aggressive industry of “ambulance chasers” making thousands of mostly automated calls every day.
I get probably half a dozen calls and texts a week now at the office during my working day, usually from automated systems asking if I have been mis-sold PPI (61 per cent of all financial complaints) or if I need my pension “unlocked.”.
The other day, after receiving several automated calls from unlocking companies, I decided to respond. I pressed the relevant buttons and was eventually put through to a woman.
The other day, after receiving several automated calls from pension unlocking companies, I decided to respond. Kevin O’Donnell“OK,” I said, “tell me about pensions unlocking. What is it?”
Her reply was illuminating: “Sorry, love, I don’t know anything about it, we’re just collecting names and phone numbers for other people.” She literally did not have a clue what “pensions unlocking” was.
I pushed her for more details and she ended up putting the phone down on me. Ironic.
This random pestering of millions of individuals to seek “complaints” is utterly wrong and should be clamped down on by the regulators. I wonder how many people have already been cheated out of a large chunk of their pension because they answered one of these calls.
The FCA says it is dealing with millions of complaints and tries to impress us with its efficiency and how quickly they are resolved. The fact is that only 51 per cent of complaints in the most recent period were upheld, meaning an incredible 49 per cent were rejected. In other words, 1.4m of the most recent batch of complaints in the first half were probably unwarranted or spurious.
Financial advisers may believe that this is something of a sideshow, but their reputation is tarnished by this avalanche of complaints. Sadly, the public finds it quite hard to differentiate between one part of the financial services sector and another. For them, advisers and bankers all work in finance.
The FCA needs to review where the complaints culture is heading, what damage the millions of complaints are causing to the reputation of financial services and the wisdom of naming innocent advisory and financial services firms under investigation.
Kevin O’Donnell is a financial writer and journalist
