IFAApr 25 2019

Fos apologises to adviser over process error

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Fos apologises to adviser over process error

The Financial Ombudsman Service has apologised to an adviser for incorrectly pursuing his company in an alleged case of unsuitable pension advice. 

IFS Financial Management Ltd was established in 2003, but in February it received notice from the ombudsman that a complaint had been made against the company for pension advice allegedly received in 1999. 

The complainant alleged he had been advised to set up a personal pension with a provider rather than enrol in his employer's defined benefit pension, and believed he would have been better off in the latter. 

The complainant was part of a client bank which joined IFS Financial Management in 2005, following the retirement of a broker at another company which was later wound down. 

In his submission to the ombudsman the complainant did acknowledge the original adviser who first allegedly offered the advice was no longer in business, and he was therefore complaining about IFS Financial Management. 

Jeremy Miles, managing director at IFS Financial Management, claims the only contact he had with the client prior to the complaint lodged earlier this year was an offer of review his company sent out to all clients amid the financial crash in 2008, but he said this letter went unanswered.   

In correspondence seen by FTAdviser Mr Miles informed the ombudsman that the advice in question was alleged to have taken place before his company existed and confirmed he had never met or advised the client. 

But in response to this a customer help assistant at the ombudsman asked Mr Miles to justify the offer of review his company had sent to the client in 2008, to which Mr Miles responded by reiterating his position and submitting a formal complaint against the Fos claiming they had not taken steps to verify the accuracy of the claim. 

In a response received three weeks later, a team manager at the ombudsman apologised to Mr Miles and confirmed the correct procedure had not been followed in verifying the claim against his company. 

The email read: "When we set up complaints we do it on the information provided by the consumer at that time. Sometimes it’s not always clear which business the complaint is about.

"We try, where possible to set complaints up against the right business when we receive information from the consumer. But we don’t always get this right. And often we’ll need to ask questions of both parties to make sure we have set the complaint up against the right business."

The email continued: "...the correct course of action would have been to contact the client for further information to ascertain who the complaint should have been set up against. And to get some further information on what the client's complaint concerned.  I’m sorry that this did not happen."

The email confirmed feedback would be given to the team to ensure a repeat scenario did not happen again in the future. 

Mr Miles said he was concerned the client had not provided any evidence to the ombudsman of the advice he received and the service could therefore not be sure it existed when pursuing the complaint further. 

The team manager clarified this stage of enquires against IFS Financial Management had not yet become "chargeable", which would only take effect once a case is ready for investigation.

Currently businesses that have 25 cases or fewer referred to the ombudsman in a year are not required to pay any case fees, but a £550 charge comes in to play for any complaints resolved above this number. 

A Fos spokesperson said: "Occasionally it is not readily apparent which business a complaint should be about, especially when a business’s structure has changed, or when an individual adviser has moved around, taking their clients with them.  

"Our job is to look into the facts and to get to the bottom of the complaint – which includes making sure that the right business is being held to account.  If a business thinks we’ve got this wrong they should let us know."   

FTAdviser understands less than 0.5 per cent of complaints received by the ombudsman are about financial advisers, with new complaints of this nature down 7 per cent to 913 in the last six months of 2018 compared with the first half of last year.

Speaking at a Treasury select committee in January Caroline Wayman, chief ombudsman and chief executive of the Fos, said the service's strategic plan for the year ahead included plans to bring in extra resources in an effort to manage rising case waiting times. 

But Ms Wayman maintained longer waiting times and a growing case load was due to a significantly increased demand for the ombudsman's services, rather than a knock-on effect of the Fos' restructure in 2016.

The jurisdiction of the Fos has been widely reported in recent weeks, following the decision of the Financial Conduct Authority to increase the ombudsman's compensation limit from £150,000 to £350,000 at the beginning of this month. 

The increase has raised concerns among advisers regarding the availability of professional indemnity insurance in compliance with capital requirements and claims higher premiums as a result could push smaller companies out of the market. 

rachel.addison@ft.com