FOS stats are not enough
Processes are very important but they must be sensible. We were trying to cancel my late mother’s house contents insurance, only to be told that the cancellation could only be carried out by the policyholder. This was obviously problematic but that did not occur to the person that we were dealing with. In the end, our solicitor had to intervene, proving that some processes can be critically flawed.
More recently, my attention has been drawn to the various people, firms and associations making submissions to the Treasury select committee’s RDR consultation.
Many contain the volatile combination of unsubstan-tiated statements and dodgy statistical analysis. There is a world of a difference between the raw data and data that reaches publication. Extrapolating headline data is not just unsafe, it is plain daft.
I refer of course to the continual promotion of the statement that IFAs evidently have a low level of complaints compared to the banks. There has been far too much emphasis on this particular point and we should consider why this percentage is so low, instead of accepting statistics at face value. Having studied statistics to degree level, I could not understand people extrapolating statistics without having reviewed the raw data or the appropriate-ness of a single source.
With such total reliance on these Financial Ombudsman Service statistics, is it any wonder that people have not thought about the fact that those IFAs who have failed would all fall in the compensation scheme, yet many would have ended up at the FOS if they had survived.
As such, I would suggest that it is unlikely that they would form part of the FOS statistics. To simply focus on one set of stats can give a completely misleading impression. I could be completely wrong about this but I suspect that the more you lift the stone, the more you start to see more relevant statistics.
I was recounting the house insurance cancellation saga to one of my friends. He had a similar problem in that he had wanted to make some changes to some investments but had been told he had to bring his father with him, despite the fact that his father was dead and despite the fact this institution knew that.
I asked him if his father had been buried or cremated. He told me his father had been cremated.
As soon as he answered, he paused for a moment and then said: “You are a smart guy, and I will try it tomorrow”.
The next day he headed for the bank carrying the urn containing his father’s ashes. When asked if he had brought his father, he said yes and plonked the urn on the counter. Admittedly there was some screaming but I think he got his point across. Process, like statistics, is very important, but you have to take into account the other party’s perspective.
The submissions to the Treasury select committee must include supporting research, if not, they are pointless. We can criticise the FSA research, we can say it is ill-founded, we can say it is badly done, but ultimately if we do not have anything of our own to counter it, then we are likely to be rejected out of hand.
Robert Reid is managing director of Syndaxi Chartered Financial Planners