Caroline Mitchell, lead ombudsman of the Financial Ombudsman Service, has revealed her adjudicators have been told it is not acceptable to ignore adviser’s phone calls.
In the keynote address at FTAdviser’s Retirement Freedoms Forum today, she said that they are getting much more “21st century” and picking up the phone more.
“When I talk to advisers they say they never manage to talk to adjudicators, they’re always on voicemail and never manage to call back.
“That is not what should happen. I have done some training with adjudicators and I tell them they must talk to both parties. They can’t talk to people on the phone if they are on voicemail all the time.
Ms Mitchell added: “If you find that is a problem, then get in touch with me and I will sort that out. You ought to be able to talk to them. It is really important that we can now get to a stage where we can talk to a consumer, talk to a business, get to the bottom of a problem and solve it.”
She also explained why the Fos will sometimes rule in a different way from the courts, pointing out that they have an inquisitorial role.
“Sometimes the consumer will come to us and say I was supposed to have enough money left over from my mortgage endowment policy to pay off my mortgage and buy a camper van.
“They do not quite understand why that hasn’t happened. That is what the inquisitorial remit is all about. It wouldn’t be fair for the consumer to be penalised if they didn’t understand the language of the technology of financial services to word their complaints in the right terms.
Ms Mitchell also noted the alternative dispute resolution route, stating that the Fos is not supposed to be the same as the courts. “We are inquisitorial, the courts are adversarial. You have to pay to use the courts, whereas we are free to consumers.
“Fairness is something I know troubles people. They think there is no certainty about what we do, we go off on our own and you can’t know what approach we are going to take. I don’t think that is the case. I hope that is not the case.
Ms Mitchell continued that most of the things they deal with are “fairly well trodden paths” that adjudicators have been looking at for quite a long time, but the law and our rules say the Fos must make decisions that are fair and reasonable in all circumstances for each individual case, having regards to the law, having regards to regulated rules and guidance and industry codes of practice and to what ombudsmen think was good industry practice at the time.
“So, we can’t ignore the law. We are also required to give reasons for our decisions. So, if we are going to depart from the law we must be able to explain and justify that.
“This was introduced because we are an alternative dispute resolution solution. The law can deliver harsh results for consumers sometimes who may have made mistakes.
“Financial services businesses aren’t always very clear about what they are asking for or what they are saying.
“Whereas a court might say the consumer signed a contract and that is an end to it we can look around it. Most people I think aren’t surprised by that and find the fairness does make sense.”
Advisers gathered at the Harrogate International Centre were also told by Ms Mitchell that the Fos was unable to offer any greater clarity on how it would handle complaints from insistent clients in the future.
“Insistent clients is the spectre of us (Fos) in the background, that we will come back in 20 years time – if we are all still here – and hold people responsible for having done what an insistent client wanted them to even though they didn’t think it was a terribly good idea.
“Advisers want clarity. I can’t give them that. I would if I could but I can’t.”
She pointed to the FCA’s guidance on insistent clients, pointing out as long as advice was fully considered and it was personal to the consumer, “there shouldn’t be very much to fear from us”.
If insistent clients are going to ignore advice, Ms Mitchell said suitability reports should spell out the risk of not following the recommendation.
She said: “When the client comes back in 10 or 15 years time and says ‘I didn’t understand what was going on’ the answer is ‘You got this letter. Why didn’t you take this up at the time?’”
Her comments about insistent clients came after the Work and Pensions select committee published a report on pension freedom and guidance which stated the regulator needs to make clearer the distinction between guidance and advice, the definitions of safeguarded benefits and protections in providing advice to insistent clients.
emma.hughes@ft.com
