As a general principle I have, over the years, supported the Financial Ombudsman Service (Fos) as a system which, while not perfect, generally enables complaints from consumers to be dealt with in a less costly and more effective way than through the courts.
Recently however, I have seen a case concerning an IFA with an unblemished record of 20 years, where the ombudsman’s decision appears so contrary to natural justice and common sense, it has shattered my confidence in Fos.
The case was one regarding insistent clients, which found against the adviser.
While not being about a final salary transfer, it has created a ‘red alert’ for other financial advisers regarding clients who want them to facilitate their exit from a final salary scheme. In essence, the message from Fos appears clear – whatever the facts the adviser is guilty.
In this case, the Fos adjudicator accepted that the adviser and the client never met and that the client was told in writing at the time (2010) that, “no advice had been asked for, or given, as to whether the investment the client wanted was appropriate or suitable”.
Even further, the ombudsman accepted that the letter to the client stated: “They were aware that the investment was high-risk and their funds could be at risk”, and that the client acknowledged this letter.
In a nutshell therefore, the client decided what they wanted, then instructed the IFA to facilitate what they wanted; they understood they were not receiving advice, nor did they ask for any.
Plus they were informed that their investment was high-risk and they could lose their money.
Despite all of this being acknowledged by the adjudicator he, quite astonishingly, ignored it and found in favour of the claimant. I am no Victor Meldrew, however, “I don’t believe it”.
Having read the adjudicator’s correspondence, I believe the decision is simply wrong. In reaching this bizarre judgement Fos keeps referring to advice. However, it is very clear the client neither asked for, expected, nor was given any advice. Nor was the adviser’s letter to the client silent on the matter, as it clearly stated no advice was being given.
Carry this principle through to the issues of insistent clients and ‘pension freedoms’ and the alarm bells start sounding in earnest. It is crystal clear that unless the FAMR and/or Fos and the FCA urgently address this matter and apply the principles of natural justice and common sense, the ambulance chasers are going to have a field day. Without natural justice and common sense, any adviser who has facilitated an insistent client’s wishes over quitting their final salary schemes is likely to be dead in the water.
Ken Davy is chairman of SimplyBiz Group