How long is too long for a client to make a financial complaint about the advice they have received? It is a question that is coming increasingly to the fore and one I suspect many advisers are asking themselves.
Soon we will hear from the Financial Conduct Authority about the time bar on payment protection insurance (PPI) complaints after a decade of irritation. I am sure we will all miss being texted, rung up and generally pestered to death by PPI claims firms. Or perhaps not.
The regulator will rule that PPI complaints must eventually be time-barred. Inevitably this will be challenged so it may be some years before we have heard the end of the PPI saga, even though the curtain is beginning to come down.
Fortunately, few advisers will have been chased over PPI, albeit virtually no-one in the UK has been untouched by the endless encouragement by claims firms to make a complaint about PPI.
As a sidenote, it is probably worth pointing out that the PPI firms will need to move on to something else to complain about and that may well be something advisers need to be concerned about. I have already seen advertisements encouraging consumers to make complaints about poor investment advice from their adviser but that is a topic for another column.
There is no doubt the PPI avalanche is now past its peak. At one point in 2009, the Financial Ombudsman said it accounted for 30 per cent of all cases.
What is more important is that the PPI complaints mountain has created a whole industry of professional complaint firms. These will not go away. The future is one in which advisers will need to be much sharper and better organised to protect themselves from potentially spurious claims. Paperwork will need to be better kept, advice more clearly justified, due diligence performed better and so on. I doubt many advisers have not learnt lessons from the PPP and other complaints sagas.
I was reminded of all this by a story in Financial Adviser recently in which the respected IFA Philip Milton criticised the Financial Ombudsman Service (Fos) for being inconsistent about its time limits. Acting on behalf of two clients, he was “bemused” to find the Fos had rejected a complaint about mortgage advice because of its time bars. The Fos will generally only consider a complaint within six years of the event or, if later, within three years of when the consumer first realised they had been mis-sold or had grounds for a complaint. That is a bit vague, but time bars make sense.
Of course, the Fos has considered many complaints in the past that go back decades, particularly endowment and pensions claims. It is a unique feature of financial advice – and the very long-term contracts often entered into by consumers with their adviser – that it can take 25 years or more for a product to mature. That is 25 years for something to go wrong.