I can sympathise. A perfect storm of diminished consumer trust and disruptive technological innovation presents challenge enough; set that against the backdrop of a seemingly ever-more hostile regulatory environment that is placing an exponential cost burden on firms and it’s easy to see why many feel unduly targeted.
Never is this more evident than in the case of the Financial Ombudsman Service, which many clearly feel is predisposed to find against advisers as a result of some bias or prejudice.
Now, I have to say that I am not a conspiracy theorist. Just as I do not believe the Retail Distribution Review is a contrivance to stack the odds against financial advisers, so I do not believe Fos adjudicators are on a malevolent mission to force you out of business.
Indeed, the service has not shied away from highlighting statistics showing financial advisers make up only 3 per cent of its complaints bag each year - and despite the fact that in high-profile cases advisers invariably appear to be on the wrong end of the decision, most of the larger advice firms are shown to have favourable claim uphold rates.
For all of that, however, I am deeply unsettled by the way the Ombudsman operates.
Interim chief ombudsman and Fos chief executive Tony Boorman’s response to a question in the latest issue of its monthly newsletter displays a worrying lack of regard for the primacy of law and a consumer bias that many would argue is laudable, but that undermines any notion of objectivity.
Fos displays a lack of regard for the primacy of law and a consumer bias that many would argue is laudable but that undermines objectivityIn short: Mr Boorman said that Fos is tasked with assessing whether clients have been treated unfairly, irrespective of whether the firm that is subject to a complaint has actually breached any rules or laws.
The revelations came in response to a question from an adviser, who asked: “As a financial adviser running my own business, I’m regulated by the Financial Conduct Authority and have to comply with what they say.
“It seems that I could do everything my regulator requires me to do, but the Ombudsman could still say I haven’t been ‘fair’ and uphold a complaint against me. How am I supposed to know what to do?”
Mr Boorman responded: “Most of the time, what we say is in line with how a court would look at a case - or what the regulator would say.
“But there are some situations when applying the law or rules strictly can actually lead to an unfair outcome. The law can sometimes be out of date or out of kilter - and can end up being too harsh on consumers.”
Perhaps Mr Boorman’s assertion that Fos decisions most often chime with what a court would say is correct, but that does not stop it being of concern that it seems to reserve absolute discretion to go beyond the boundaries against which firms are ostensibly judged.
This is especially true considering its otherwise reasonable argument that adjudicators and ombudsmen do not need to be - and in fact are not - qualified to the level of those they preside over.
That is all well and good if you are applying an objective standard to a case. Given that the service admits it is far more subjective in its analysis, I can see why well qualified and typically vastly experienced advisers find it intolerable that they are being judged unworthy by those that are not similarly specialised.
A job advertisement for ombudsmen last year stated that “no qualifications [are] necessary, legal experience is preferable and some knowledge in financial services is an advantage”, while requiring a person “sensitive to the customers’ needs”. By the way, Fos said the job pays “up to £85,537”.
Utterly consumer focused, often unqualified, and with the latitude to rule against firms that have done nothing wrong in the eyes of the law or the regulator. No wonder advisers feel they get the thin end of the wedge.
