Just 2 per cent of complains about pensions to the Financial Ombudsman Service since April 2015 related to defined benefit (DB) transfers, the service has revealed.
Today (7 November) the Fos revealed it had received almost 15,000 complaints about pensions since the pension freedoms for the sector were introduced.
But despite action from the Financial Conduct Authority to increase standards among advisers carrying out DB transfers, the number of complaints about them from consumers has so far been low.
Just 318 – or just over 2 per cent -- of the 14,912 pension complaints related to DB transfers and only a third of these were actually upheld by the Fos since 2015.
The issue garnering the largest number of complaints – 119 out of 318 – was a delay in advice. This issue was also where the Fos sided with the customer the most frequently, with a 44 per cent uphold rate.
Despite this, just five people complained they had suffered an investment loss due to a delay, with none of these reports being upheld.
Only five people complained because the adviser had declined to advise them over a DB transfer, with just one of these complaints being upheld.
Along with releasing these figures, the Fos also revealed that it considers when assessing complaints about DB transfers.
Caroline Mitchell, lead ombudsman at the Fos, said: "When we consider a complaint we’ll be asking: did the adviser really know their customer, and all their relevant circumstances? Did they understand what their customer was trying to achieve? And were there any better ways they could have helped that customer get what they want from their retirement, rather than accessing their pension funds?"
She added that advisers should keep their clients up to date and manage their expectations on timings and outcomes throughout the process, whether a transfer was going ahead or not.
Ms Mitchell added: "We’ll continue to provide reassurance – and to demonstrate – that we’ll look into pensions complaints in light of the standards that applied at the time, and that we and the FCA are on the same page when it comes to those standards."
The second largest source of complaints to the Fos involving DB transfers surrounded admin issues, with 29 per cent of these being upheld.
Keith Richards, chief executive of the Personal Finance Society, said: "It is important to acknowledge the pressure advisers are under when they give advice in this changing landscape. Frequently, consumers will already have been tempted by six-figure sums and will only be going to an adviser as a means to unlocking that fund.
"In response, the Personal Finance Society has established a Pensions Advice Taskforce. I have been hugely encouraged by the number of senior experts who have wanted to take part, including representatives from regulated firms, consumer groups and public bodies.
"Together, we are developing a code of conduct for advisers that establishes good practice beyond the minimum legal and regulatory requirements, as well as a consumer-facing guide to help consumers understand what they can expect from a PAT member and how they can find one."
Former pensions minister Sir Steve Webb, now director of policy at Royal London, said advisers – and the Fos – should expect to see many complaints stemming from advice given years ago, especially if or when equity markets took a downturn.
Sir Steve said he was concerned about a potential surge of new complaints about DB transfers. He said: "With the average PPI complaint yielding less than £3,000 compared with potential six-figure compensation for transfer complaints, the claims management industry will be licking its lips.
"Advisers are already facing hikes in premiums as professional indemnity insurers start to fear the worst."
He urged the Fos to clarify whether it would be using the same standards as the regulator, or whether a complaint may be upheld even when an adviser had "ticked all the FCA’s boxes".
The Fos figures did show complaints about pensions had been going up in the years since the freedoms were introduced, with 4,495 in 2015/16, 5,160 in 2016/17 and 5,257 in 2017/18.
Despite this the proportion being upheld at stayed similar, at around a third.
Chief ombudsman and Fos chief executive Caroline Wayman said: "Most financial advisers I meet – and indeed most financial advisers – haven’t ever had a complaint. As long as advisers continue to treat their customers fairly, it’s likely to stay that way.
"As ever, the challenge for advisers isn’t just to know the rules, but to apply them to real lives – understanding where people are coming from, their hopes for the future, and what really matters to them. We’ll continue to share our insights from the complaints which we see."
