Fos treating IFAs as 'guilty until proven innocent'

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Fos treating IFAs as 'guilty until proven innocent'

The survey, carried out by Panacea Adviser, found 83 per cent of advisers felt the Fos rules and process put an adviser in a position of having to prove their innocence, rather than the complainant having to prove the adviser was in the wrong.

Meanwhile, 60 per cent of advisers felt Fos adjudications were unfair and 66 per cent believed adjudicators or ombudsmen were helping complainants create complaints where none existed.

It comes after the Fos faced accusations of bias in a Channel 4 Dispatches documentary which led to a review by former Which executive director Richard Lloyd.

The bias in this instance was against consumers, and the review by Mr Lloyd found there was no evidence of the Fos exhibiting favouritism towards financial institutions.

Derek Bradley, founder and chief executive of Panacea Adviser, said what had struck him most was the fact the results were little changed on the previous surveys he had done on this issue.

He said: "It is clearly the case they are having some issues with this. If it is based on fact or if it is perception, then it is down to the Fos to correct that.

"The first thing the Fos should do is to create some transparency in the process and at least part of that transparency should be to meet with the trade bodies and have an open discussion about how this works.

"The people who are most sensitive to Fos decisions are small financial advice businesses because for a lot of them it is very personal."

The survey also found 80 per cent of advisers felt it was unfair they were not able to enjoy the protection of a long stop, which would place a limit on the time period after which a client could complain about the advice they were given.

In the Financial Advice Market Review, the Financial Conduct Authority ruled out the introduction of a 15-year long stop limitation period on complaints to the Fos because it found very few complaints actually fell into this category and an even smaller number were upheld.

But the regulator said that as part of the review of the FAMR in 2019, the FCA and HM Treasury would consider "any ongoing trends and the impact of the [Fos's] complaints data relating to advice on long-term products".

In response to Mr Bradley's comments about the need to engage with the industry more, a spokesman for the Fos said: "The Ombudsman organises and takes part in roadshows, exhibitions and events across the UK.

"This is part of our commitment to share our knowledge and experience with the outside world, helping to prevent complaints and encourage consumers and businesses to settle problems themselves.

"We engage with trade bodies frequently including through our twice-yearly industry steering groups, regular bilateral meetings, and maintaining constructive working relationships throughout. We also engage directly with IFAs across the country throughout the year, through a series of roundtable discussions, in conjunction with the Financial Conduct Authority."

He added that just 0.5 per cent of the complaints the Fos saw last year were about advisers, and the number of these complaints had dropped "significantly".

While Mr Lloyd largely exonerated the ombudsman service, and dismissed concerns about institutional bias in favour of financial institutions, he raised concerns about the restructure which took place in 2016.

Mr Lloyd said one of the problems with the reorganisation was that it had been "quite top-down," which had affected morale.

He also warned the service's strive for efficiency had begun to be seen by staff at the service as the "overriding priority" and he recommended that management shift the focus onto quality.

Another concern raised by Dispatches was that investigators did not have the knowledge to handle complaints, and Mr Lloyd found this could be the case for people new to the role - particularly given the Fos' move to a new model without specialisms.

Pete Matthew, managing director of Jacksons Wealth Management, said: "We have, mercifully, precious little experience with the Ombudsman. Only once in our 44-year history have we been found against, in our view incorrectly."

He was hesitant to call the Fos prejudiced but thought it tended to apply "current thinking to old cases".

Mr Matthew said: "While endowments, for example, have been shown to be a bad idea in hindsight, at the time they were acceptable mortgage repayment vehicles. As long as the case was compliant at the time, it should stand.

"I think the biggest issue is that we have no real right to reply, except through the courts, so most advisers will roll over if found against."

damian.fantato@ft.com