Fos complaints, reforms consequences: This week’s news

Fos complaints, reforms consequences: This week’s news

Earlier this week, complaints data was published by the Financial Ombudsman Service which showed that while total pension complaints had fallen slightly, there were increases in annuities and drawdown complaints.

Pensions continue to dominate headlines, with elsewhere data showing what clients are (or are not) doing with their pots and whether advisers are seeing business increase due to the reforms.

Here’s a round-up of the top five key themes from this week’s news:

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1. Adviser complaints have dropped - and doubled.

Data published this week showed that while the number of adviser complaints dropped to 2,875 - the lowest since 2012 - the proportion of adviser complaints have actually doubled as the total number of ombudsman complaints feel 36 per cent amid a slowing of PPI claims.

Advisers still represent a tiny proportion of the workload, with just 1 per cent of total complaints. The uphold rate is 33 per cent for cases up to 14 years old - and 30 per cent for cases that are at least 15 years old. That’s down from 35 per cent and up from 28 per cent respectively.

As reported by FTAdviser, annuity and drawdown complaints saw an upward swing, respectively both increasing by 29 per cent and 7 per cent.

However, these areas should give advisers some comfort as that uphold rates for both products have fallen: annuities from 32 per cent to 20 per cent and income drawdown rates from 49 per cent to 42 per cent. Fears of retroactive judgement might be overdone.

With a surge in pension complaints driven by the pension freedoms expected over the next few years, it will be very interesting to see how this trend pans out.

2. Pension freedoms overseas consequences.

FTAdviser revealed this week that transfers to Australian pension schemes on behalf of emigrating UK savers through one firm are being halted due to wrangling over the new rules to prevent pension freedoms abuse.

This could see swathes of overseas pensions lose their rights to preserve UK tax relief.

Pension Transfer Specialists, a company based in Australia that specialises in transfers from UK pension schemes, circulated an email suggesting that HMRC should back down, after it emerged that new rules could leave savers facing hefty penalty charges.

The communication follows a letter sent to overseas pension schemes last month backdating regulations to 6 April, when pension freedoms came into force, seeking schemes to confirm compliance with age restrictions on pension access.

Schemes must not allow access to pension savings before the age of 55 or they face losing their registered status. This would trigger 55 per cent ‘unauthorised’ charges and potentially even additional 15 per cent penalty fees.

It’s not turned out to be the easy transition some had hoped to include overseas scheme savings within the UK freedoms.

3. Do referrals lead to paid work?

As revealed in January, advisers will pay £4.2m towards the pension freedoms ‘guidance guarantee’ levy, with the overall initial industry levy for 2015/16 hitting £35m. Other groups will pay £7.7m.