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Mas in climbdown over misleading ‘mis-selling’ advice

The Money Advice Service has been forced to climb down over its guidance on making mis-selling complaints following criticism that it breached FCA rules and encouraged spurious claims.

A spokesman for Mas confirmed it had “revised” advice for consumers with endowment mortgages to ensure it did not mislead users over the acceptable timeframe for seeking redress.

The industry funded service previously asserted that borrowers could complain at any time after receiving a letter from their endowment provider regarding a shortfall in their policy, so long as they made it clear they “did not understand this letter at the time”.

This was found to have contradicted FCA dispute resolution guidelines that rule out redress if a client does not complain within three months of receiving the letter, most commonly seen as the point when consumers would become reasonably aware of mis-selling.

The Mas website stated: “If you feel you were mis-sold your policy you need to put your complaint in soon because there is a deadline looming. You have either six years from when the policy was sold, or three years from when you realised the policy was potentially mis-sold.

“For many people this latter date is the most important and it coincides with when they received a letter from their endowment provider warning them of an expected shortfall in their policy.

“However, if you didn’t fully understand this letter at the time and have only just realised you may have been mis-sold your product, there is still time to put in a complaint. Just make it clear that you are within three years of when you fully understood the situation regarding your endowment and realised it was mis-sold.”

Derek Bradley, founder of online hub Panacea Adviser, said: “This was disingenuous advice that inferred that someone will be happy to throw money at you for making a complaint, even if you fall outside the FCA time limits.

“The client does not have to submit any additional evidence to back up the statement that they did not ‘understand’ their correspondence.”

He added that the situation risked prompting a number of groundless complaints, putting extra pressure on the Ombudsman and placing an unnecessary burden on advisory firms under investigation.

According to FCA handbook (section DISP 2.8), the Ombudsman cannot consider a complaint more than six years after the alleged mis-selling occurred or more than three years after the complainant became aware (or ought reasonably to have become aware) that he/she had cause for complaint.

The news follows yesterday’s (3 December) publication of a damning Treasury Select Committee report that questioned whether Mas would be able to effectively address the ‘advice gap’, citing claims that it offers a redundant service that duplicates what is already available.

In a strong rebuttal, Mas dismissed the report as out of date saying it was based on information over a year old and added that many of the committee’s recommendations have already been implemented.