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Adviser claim uphold rates fall on sub-15 year cases

Donia O’Loughlin

Uphold rates for adviser complaints have fallen to their lowest level in five years, for complaints that are less than 15 years old, FTAdviser can reveal.

According to Financial Ombudsman Service complaints data for the last financial year, the number of adviser complaints fell to 2,875, compared to 3,599 in the 2013/14 financial year.

Of these, 2,468 complaints were for cases that were less than 15 years old and 407 stem from recommendations made more than 15 years ago. This is the length of time campaigners would like to see established as a long-stop for complaints against advisers.

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According to Fos data, the uphold rate for last year for consumer complaints that are below this threshold was 36.5 per cent, down from 40 per cent in 2013/2014 and a 14.5 per cent drop from the level five years’ ago in 2010/11.

Conversely, the data show a marginal increase in the uphold rate for complaints that were made at least 15 years from when the ‘event occurred’, though such claims do have a lower uphold rate overall and rose from 28 per cent to 30 per cent. Five years’ ago it stood at 23 per cent.

YearNew cases, less than 15 years oldUphold, averageNew cases, 15+ yearsUphold, 15+ years
2010/112,39951%36723%
2011/122,49751%36027%
2012/133,62237.5%51731%
2013/143,06140%53828%
2014/152,46836.5%40730%
Average2,80943.2%43727%
Source: Fos

A Fos spokesperson told FTAdviser: “The ombudsman recognises how strongly some advisers feel about complaints that relate to financial advice. Although these cases make up a very small fraction of our work, it is encouraging to see uphold rates falling.”

The uphold rate should give some comfort to advisers that fears over insistent clients are, while not completely unfounded, somewhat overblown.

Many IFAs have told FTAdviser that they plan to steer clear of clients that want to go against their advice, for example for a defined benefit transfer, however others want to help out of fear that their clients will otherwise execute decisions poorly or use unscrupulous non-advisers.

The Personal Finance Society has even written to the government and the Financial Conduct Authority warning they run the risk of creating a future mis-selling scandal if they do not address the issue of ‘insistent clients’ acting against professional advice.

Since then, the FCA outlined three steps to help advisers deal with this scenario.

Of all the providers, the Fos data show advisers have lower complaint numbers than most other firms and lower uphold rates than many, especially banks, general insurance and mortgage brokers, and fund managers.

Banks have the highest number of complaints and an uphold rate of 65 per cent, which increased from 49 per cent in 2010/11

General insurance and/or mortgage broker complaints have seen their uphold rate increase to 66 per cent in 2014/15 from 43 per cent in 2010/11.

The fund manager complaint uphold rate is currently at 67 per cent and a whopping 92 per cent if the complaints from when the event occurred was older than 15 years. In 2010, these figures were at 50 per cent and 0 per cent respectively.

Building societies have by far the lowest uphold rate at just 8 per cent, which is around the same as it was five years ago. Friendly societies have an uphold rate of 18 per cent, a vast improvement on the 38 per cent recorded for 2010.