Disgruntled clients are going “straight for the jugular” by complaining to the Financial Ombudsman Service instead of following the proper procedures, adviser Alan Lakey has warned.
Mr Lakey, partner for Hertfordshire-based Highclere Financial Services, said that a “breakdown of trust” between an IFA and a client could lead to that client attempting to “short-circuit” the normal processes by approaching Fos directly, although such complaints would be rejected.
His comments followed a piece in the September edition of Ombudsman News, providing updates from Fos, which highlighted a case in which an IFA’s client had complained about the firm without the firm’s knowledge.
In the piece, Fos said: “An IFA got in touch after receiving a letter from the ombudsman service – saying that one of their customers had made a complaint.
“This was the first the IFA had heard of it – and they were very unhappy about being charged a case fee.”
Fos added: “We reassured the IFA that we wouldn’t take things further until he had had the chance to look into his customer’s concerns – and then only if the customer was not happy.”
As part of the Fos complaints process, consumers must first contact the bank, insurance company or finance firm they are unhappy with.
In its online instructions regarding the complaints process, Fos said: “It’s important that you tell the business you’re unhappy with [them] - and give them a chance to look into your problem. Under the rules they have eight weeks to do this.”
If a customer then feels that their complaint has not been handled fairly, they can contact Fos.
Mr Lakey said: “People get it in their head to go straight for the jugular, particularly if there is some breakdown of trust.
“It is either client ignorance or something that has been done to avoid contacting the adviser.”
He also said there could be issues with clients making “dubious” complaints.
A recent Panacea Adviser survey, which attracted 183 responses from IFAs, showed alarm about “false” claims for compensation.
When asked: “Have you experienced false or manufactured accusations from complainants in an attempt to gain compensation?”, 74 per cent said yes and 26 per cent said no.
Earlier this month, Gill Cardy, network development director of Cardiff-based Validpath, warned that Fos must be “in sync” with advisers on issues such as investing risk. In her column in Financial Adviser’s 4 September issue, she said: “If Fos applies a radically different understanding of investing risk than the one in common use in the entire adviser population it judges, then IFAs (and textbook authors) need to know about it as a matter of urgency.”