OpinionMar 6 2014

Is Fos award cap victory really a good thing for advisers?

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And I can see why a glass of claret may have been raised in celebration.

In essence the Appeal Court appears to have made it more difficult for a vexatious litigant to go for two bites of the compensation cherry by accepting a Financial Ombudsman award and then asking for more at the courts.

Clark & Clark argued that inappropriate advice from In Focus Asset Management & Tax Solutions had caused losses of more than £500,000.

They accepted the statutory maximum £100,000 that the ombudsman could award, but added a handwritten rider reserving the right to pursue the matter in the civil courts.

The case has bounced up through courts, with In Focus finally winning.

But is this really a good thing for the industry and consumers?

It may quell fears about open-ended liabilities, but the real victor is the legal profession.

Any consumer who has a big claim against an adviser may no longer feel able to use the ombudsman.

Any consumer who has a big claim against an adviser may no longer feel able to use the ombudsman.

So both they and the financial adviser will have to go through the courts from the start.

It has been suggested consumers could split claims into smaller components – again, this won’t help either advisers or their clients. But lawyers could gain.

I have seen it argued that this will be a bash on the nose to the claims management industry, which may have tried to persuade people to use ombudsman awards to pursue larger claims.

I do not think that washes. These are extremely rare cases.

Anyone with the nous and the money to pursue a large claim is not going to be taken in by claims managers whose province tends to be the lower-earning and less well-educated.

And this does not close the door where issues have not been considered by the ombudsman.

So the only losers will be those who have very large claims and will be wary of using the ombudsman for fear that even if they win they will only be cutting their losses while the firm responsible will get away with cut-price compensation.

That may make you feel happier about the state of your industry but it leaves me feeling distinctly uneasy.

It is time to rebuild trust

Mark Polson, principal of consultancy Lang Cat, hit the nail on the head when he said if the industry wants to solve the pensions gap it must first focus on the trust gap.

Trust should be the foundation of any relationship between the consumer and a financial firm.

Instead of concentrating on rebuilding it, too much effort has been expended in some quarters on futile attempts to defend the indefensible and maintain the status quo.

I have heard senior people arguing that consumers do not want clarity in charges because it will be too confusing. I suspect they are actually concerned about the consequences, once the fog of bundled charges is lifted.

Since the FTSE 100 was launched 30 years ago the stock market has generated average annual growth of 6.57 per cent, knocking housing with its 5.84 per cent, as measured by Halifax house price index, into a cocked hat. Dividends would have added to the bounty. But private investors have been stripped of much of this by charges.

Now the clean up has started it really is time to win back trust.

No laughing matter for Filip

Polish financial adviser Filip Slipaczek felt compelled to complain about call centre staff laughing at his surname.

As someone whose middle name, Seymour, provoked titters throughout my youth I can empathise with him.

My decision to marry a woman whose maiden name was Squirrell provoked further hilarity. Think nuts if you’re struggling.

But Mr Slipaczek should spare a thought for the man who used to be in charge of Norwich’s environmental waste and had his name emblazoned on every dustcart – Mr Smellie had the audience of Esther Rantzen’s TV show That’s Life rolling in the aisles.

Supposedly funny names have a long history in British humour.

It isn’t nice to laugh at someone’s name – especially when it’s supposed to be a professional relationship.

But this isn’t racial intolerance. Far from it. Mr Slipaczek has simply been absorbed into a brand of British humour that’s as old and corny as a Carry On film.

Tony Hazell writes for the Daily Mail’s Money Mail section. He can be contacted at t.hazell@gmail.com