Emma Ann Hughes 

FCA uncovers ignorant savers not dodgy advisers

Emma Ann Hughes

Emma Ann Hughes

This week I have been struck down with a chest infection but even without a virus, you could have knocked me down with a feather when I read the latest research from the Financial Conduct Authority.

At least 1.3 million people claim they were mis-sold a pension or investment product by a financial adviser, according to the latest poll of the populace by the City watchdog.

So this means 13 per cent of those who have received regulated advice in the past year believe they have, recently or in the past, been mis‑sold a product.

Similarly, 13 per cent believe they have received bad advice unrelated to mis‑selling, recently or in the past.

How depressing that people’s perceptions are so far away from the actual truth.

The reality is while just over a third of complaints against financial advisers were upheld by the Financial Ombudsman Service in 2016 to 2017, the number of mis-selling claims against this section of the industry is tiny compared with banks, insurers, etc.

The latest data showed the Financial Ombudsman Service received 321,283 complaints in 2016 to 2017 but only 0.5 per cent of these involved financial advisers.

This means there were only around 1,600 complaints about financial advisers in total.

Compared to the previous year there was a reduction both in the number of complaints and the proportion of all complaints – in 2015 to 2016 there were around 3,400 against IFAs which made up 1 per cent of all complaints the ombudsman handled.

Of the 1,600-odd complaints the Financial Ombudsman Service received about advisers last year, 36 per cent of these were upheld.

The ombudsman also published the number of complaints about IFAs where the event complained about happened more than 15 years ago, data which goes to the heart of whether a long-stop is needed.

In total there were only 161 complaints of this nature, making up just 7 per cent of all complaints against IFAs.

This data from the Financial Ombudsman Service is why I feel the FCA’s research didn’t reveal widespread mis-selling in the advice industry.

What the regulator’s survey really showed is the average man on the street doesn’t understand the benefit of seeing a financial adviser.

Don’t get me wrong.

You’re not perfect but generally – as pointed out wonderfully by reader Catherine Lawton - “good advisers save and grow clients’ money day in day out”.

Last week I wrote about my fears that the pension dashboard just showed the rather than the value of these savings pots.

Clearly it isn’t just the pension dashboard that needs to do a better job of putting the client in the picture.

The financial advice industry needs to do a better job of explaining the value of your services.