The Financial Ombudsman’s annual report – published yesterday – shows strong demand for its services. But the perception of what FOS does seems to be wider than it should be.
Many people use FAS as a money advice service , as they should the Money Advice Service. I’m not sure why that is, I suspect from reading the comments sections of Money Savings Expert that people divide between the genuinely hapless and those sniffing around for a DIY compensation claim.
The villains of the piece, in terms of complaints handled, are the banks , followed by the insurers. The big ticket items in terms of FOS’ time are payday loans and PPI. The consumer protections that have come, have come too late for many, most of the complaints relate to the period when consumers were most vulnerable.
A high proportion of the claims on these banking matters are not upheld.
But claims against insurers and SIPP providers, though small in numbers are far more likely to be successful (63% against 43% overall). I suspect that personal pensions are a regulated in a more mature way with clearer rules and a more obvious definition of transgression.
I was struck by the very small numbers of claims in the pension sector (maybe in part because FOS only covers contract based plans – not occupational schemes – which include the new master trusts).
Complaints about self invested personal pensions (Sipp), and small self-administered schemes
Complaints about personal pensions were up a fifth from 1985 to 2377 (SSAS), rose from 1174 to 1574 over the year.
The upward trend in pension claims could suggest a more litigious public, a less honest advisory sector or the increase in financial banana skins occasioned by the Pension Freedoms. I have no reason to suppose that IFAs are becoming less honest or competent, ambulance chasing may be a factor but I suspect the capacity for people to get it wrong is the biggest factor.
To a large extent, you get things wrong either because you screw up your investment or you screw up your tax. IFAs are increasingly about stopping people screwing up, that is because so much more wealth is now investable and not tied up in defined benefits,
Interestingly, the ONS told me last week that they consider annuities – defined benefit schemes.
The price of freedom, as we all known, is paid by those who mess up. FOS has a delicate task in supporting those who have genuinely been mistreated while not pandering to those who are “trying it on”.
I’d be especially interested in the views of the IFAs who read this blog, as to how well they think FOS is doing,