Ombudsman sees fresh surge in Sipp complaints

Ombudsman sees fresh surge in Sipp complaints

The number of complaints to the Financial Ombudsman Service about self-invested personal pensions in 2017 looks set to beat last year's total.

So far between April and September this year the Fos has received 1,025 new cases about Sipps.

The Fos' reporting year runs from April to April, so at this half way point new Sipp complaints are already at about 70 per cent of the total for 2016/17 when there were 1,493 new cases.

But the proportion of cases being upheld this year – 50 per cent – is lower than last year when 56 per cent were upheld.

In the second quarter of this year – between July and September – there were 498 new cases about Sipps compared to 521 in the first quarter.

But the number of enquiries has increased, going up from 678 to 767 which means a smaller proportion is being converted into actual complaints.

Quarter-on-quarter the proportion of Sipp cases being upheld is only marginally lower, down to 49 per cent from 50 per cent.

The Fos limit for redress payments where it rules wrongdoing on the part of a financial services company is £150,000 and its decisions are legally binding. The complaints service is free for the general public to use.

All financial advisers must have professional indemnity insurance to cover the cost of complaints, including those coming via the Fos. But often PII policies have an excess of £10,000 to £15,000 per claim, meaning a few complaints can still wipe out an advice firm's capital buffer, pushing them into default and the claims onto the Financial Services Compensation Scheme to be paid for by all advisers through levies.

The FSCS has also reported soaring numbers of compensation claims related to Sipp advice from now failed firms.

Business generally remains brisk at the Ombudsman service. In the second quarter the Fos handled a total of 151,112 enquiries from consumers, taking on 84,366 new cases.

The most complained-about product remains payment protection insurance, with 60 per cent of complaints about this.

In comparison current accounts, the second most complained-about product, accounted for only 5 per cent of all complaints with 4.497 between July and September.

In August the Financial Conduct Authority started the clock on a two-year countdown to the deadline for making a complaint about PPI.

Caroline Wayman, the chief ombudsman, said the FCA’s awareness campaign already appears to be encouraging more people to come forward.

She said: “In our plans and budget for 2017/2018, we estimated we’d get 180,000 new complaints about PPI – accounting for 55 per cent of our workload over the course of the financial year.

“Our latest complaints snapshot suggests this was pretty accurate – and shows a significant increase in people contacting us about PPI over the last quarter.

“Our own future workload will depend too on how fairly businesses handle complaints in the first place – and how thoroughly claims management companies weigh up the merits of a case before referring it to us.

“What’s clear is that – even though we can’t say for certain how exactly things will develop – we’ll be busy with PPI for the foreseeable future.”