Stop signs
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The first relates to protection. Term insurance, whole life, critical illness and income protection account for 1.43 per cent of all complaints, which compares favourably with the 7.49 per cent for investments and pensions.
I make this point because, early in 2010, the FSA will issue a consultation which will assist them in determining whether protection should be dragged screaming into the austere RDR netherworld. If facts speak volumes, then these particular ones should go some way to appeasing any concerns it may have over the protection sector.
The second point concerns that hoary old subject, the 15-year long stop. One of the compelling arguments against the re-institution of a long stop was the evidence from the Financial Ombudsman Service that, ignoring mortgage endowments, only 2,000 cases would have been time-barred in the 2007-08 year. What this challengeable observation overlooks is that only around 30 per cent of complaints ever reach the FOS and that a high percentage of those that do are escalated by claim-mongers. During 2008 the FSA recorded 85,109 mortgage endowment complaints, of which the majority are likely to have been bought before 1993. The figures from the FOS therefore seem a little fanciful. I also wonder whether the FSA would have been so eager to quote FOS statistics some five years earlier when endowment complaints were falling faster than Icelandic banks.
To place these views into some kind of perspective, a leading network has provided me with their internal complaint figures. These showed that during 2008, 8.79 per cent of all complaints would have been time-barred using the 15-year protection and so far in 2009, the figure has risen to 12.17 per cent. If these figures are typical of the market then, during 2008, 3,337 IFA complaints would have been out of time, with the total figure, including banks and insurers being significantly higher.
Even if the FOS figures are remotely accurate they ignore the reality that while most complaints do not reach it, vast amounts of time, effort and money have and are being used in dealing with complaints which, using the law, should never have been investigated.
The joint committee on human rights is currently investigating whether the lack of a long stop has breached advisers' human rights. Using any independent and logical perspective, one would anticipate them making a positive determin-ation and we now await the October committee meeting that will decide the matter.
One question I do have for the FSA relates to the product listings in table 2(A) of its complaints' report. A scrutiny of the product names highlights both income protection and permanent health. As payment protection insurance plans are not specifically shown, I am guessing they have been categorised as income protection. As an industry, we spend time trying to build an income protection brand and distinguish it from its lesser PPI cousins and it is most unfortunate that the FSA seems to be muddying the waters in this regard.
If the industry does succeed in designing a worthwhile protection examination, I suggest that the denizens of Canary Wharf form an orderly queue so they can be among the first to gen up and learn the differences between these two types of protection.
Alan Lakey is a partner at Highclere Financial Services
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