Ombudsman complaints data appear to support a recent warning from the industry compensation scheme that advisers should brace for a steep rise in self-invested personl pension claims in the coming year, as a rise of 123 per cent was recorded for the three months to December.
Claims data published in the latest edition of the Financial Ombudsman Service’s monthly newsletter show Sipp complaints jumped from 176 in the third quarter of last year to 393 in the last three months of the year.
Earlier this month, the Financial Services Compensation Scheme warned that levies for advisers in the investment intermediation sub-sector will rise 38 per cent to £105m for the 2014/2015 financial year.
The FSCS’s plan and budget 2014/2015 also revealed that life and pension advisers are going to see their levies increase by 32 per cent, with the scheme stating that a likely surge in claims in relation to self-invested pensions was behind the hike.
Provider London and Colonial told FTAdviser last week that a permitted investment list for Sipps, small self-administered schemes and qualifying overseas pension schemes would prompt a fall in complaints and a corresponding drop in adviser levies to the FSCS.
Adam Wrench, head of business and product development, said: “This list will reverse this trend and reduce complaints. Complaints are always about non-mainstream products. If non-mainstream products are not on the list, investments into Sipps/Ssas and Qrops cannot be made.”
Complaints to the Fos about personal pensions have dropped slightly from 381 in Q3 2013 to 372 in Q4. Complaints about annuities also fell from 125 in Q3 2013 to 111 in Q4 2013.
Despite the fall in annuities claims, the newsletter featured an update on annuities that described a wide range of complaints received about the product. The update said the complaints are often about the “advice a consumer received about which annuity is most suitable for them – or about the administration of their annuity”.
It said that customers are telling the Fos that they are being offered a much lower level of income from their pension plans than they had expected, or that they had been advised to move pension and in the process had forfeited a better guaranteed rate than they could subsequently secure.
The Fos said this is a result of life expectancies improving significantly, consistently low interest rates in recent years, and fund values turning out to be significantly less than originally projected,.
The majority of Fos complaints, 74 per cent, still concern payment protection insurance, with the Fos adding that it is still currently receiving around 6,000 new PPI complaints each week. Current accounts and mortgages are the next most complained about financial products.
