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Is the FOS finally listening to advisers’ concerns?

Caroline Escott

My last column looked at the work we have been undertaking with the FCA to provide guidance on suitability reports. The aim of this guidance is to give advisers greater confidence on how to structure information in a way that encourages consumers to engage with the report document, while protecting themselves in the event of a complaint.

Feedback the article received from advisers stated it was not the FCA’s approach to suitability reports that was the significant issue, however. Instead, several advisers noted it was the attitude of the Financial Ombudsman Service that creates the most uncertainty.

We have also been in discussions with the FOS regarding its approach to decision making. This was in response to members’ concerns about a variety of issues, including inability to access adjudicators by phone, the quality and qualifications of staff, the unfeasibility of timescales and the choice of index used for compensation, among others.

Working with members, we presented the FOS with cases that demonstrated these issues and held several meetings together to discuss the finer details. While we do not agree with the ombudsman on all issues, we found its response to some points reasonable.

One tangible outcome of these meetings will be some soon-to-be-published guidance for members on how to deal with it in the event of a complaint and what you can expect from the process. Along with helping members, the aim of the document is to be able to hold the FOS to account in the event adviser experiences do not match up to its stated policies as outlined on its website or in its guide for smaller businesses.

Key issues

So what were the key areas of concern? One issue was a feeling from advisers that it was difficult for them to access an adjudicator and that, in certain cases, this was in stark contrast to the relative ease of access for a complainant.

The FOS states it is keen to “ensure [it] is accessible to all parties” and we have been pleased to hear chief executive and chief ombudsman Caroline Wayman speak out publicly on the issue and state it is working to improve the situation.

Members have also come to us with fears that investments under discussion are sometimes not looked at on a portfolio basis by an adjudicator (i.e. only as part of an investment within a portfolio).

As such, the FOS could find against a firm for recommending a high risk product to a client whose approach is considered medium risk without taking into account the medium risk profile of the overall portfolio. Such an approach goes against the FOS’ stated policy that it “takes into account the overall level of risk that all the assets held represent”.

Advisers should ensure they provide evidence that, rather than being a separate piece of advice which is considered a specific investment in a vacuum, the recommendation was provided in a way that emphasised how the investment fit into the overall strategy and as part of a portfolio to spread risk.

The FOS’s willingness to engage on these matters has been very welcome. The guidance has been just one aspect of our engagement with the ombudsman but it will hopefully boost advisers’ confidence in their dealings with it, including details of the avenues open to them if they are dissatisfied with the process.

That said, an even stronger signal to advisers that they can trust in FOS decisions would be the creation of an independent appeals process. We will continue to work towards this goal.

Caroline Escott is senior policy adviser at Apfa



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There are 9 comments at the moment, we would love to hear your opinion too.

  1. I would like to see FOS work with a group of advisors regularly to discuss cases and really understand what happens in real life and to make sure there is an open culture of communication rather than this culture of mistrust- in the main advisors are doing what they believe is best for customers, as always sometimes things go wrong that need sorting out, but the current position of them and us is just detrimental all round

    • So would I Jane.
      With modern IT, there is no need for it to be London centric either as there are many conference systems which could be used remotely.
      There is NO excuse as to why this is not already happening.
      FOS decisions need to be peer reviewed and where inconsistent with business practice, individual cases need to be re looked at by practitioners. We also need to have some form of precedent setting decisions for advisers and PI insurers to be able to work with.

  2. That’s a great idea Jane, a ‘technical’ arbitration panel of sorts (albeit for the Arbitrator, which is rather ironic but absolutely necessary in many peoples’ views).

    I am sure there would be advisers who would willingly give of their time to ensure that this would work. Maybe it should be put to them and we can hear what they think?

  3. Interesting comment from Caroline if you reverse it “While we do not agree with the ombudsman on all issues, we found its response to some points reasonable.”
    That means that some of their response were UNREASONABLE. Which ones I wonder….? Do tell as they should NOT be unreasonable in anyway as they should have no axe to grind, they loose nothing be being reasonable, but by being unreasonable, they get the same from advisers.

  4. Still no prospect of the FOS using the FCA rule book we have to adhere to as the guide to what their findings should be then? No change people, move along, nothing to see here.

  5. Jane we attended an invite last year to sit with the FOS and look at curtain case studies with them. I have to say it was an eye opener. It was part of an exercise they were doing to gain insight and to show how they worked.

    The cases did high light to us that it is not just the technical information, research and fact finding areas that need to be clear, but also what we would call soft facts. That a story supporting what had been discussed, why it was relevant, what the clients responses where to the questions and why we made the recommendation based on these soft facts as well.

    I explained my frustrations and they where very supportive. They also explained that whilst we might be doing a good job (only three complaints in 16 years and non upheld) others do not.

    Take for example Insistent Clients. Their experience in many cases is that the adviser pushed the client down this route and they are therefore naturally concerned. We do not transact Insistent Client requests as this is going against our advice.

    This is a very complicated area, but have to agree more open and regular representation from all parties will result in better understanding and system all round.

    • It’s very difficult to record soft facts on a hard fact find. The ONLY way this is going to work is if the FOS and F-pack as a whole accept that it should be for the adviser to demonstrate intent and if intent/outcome is correct, that should be then end of it, not whether all boxes were ticked. The best way to demonstrate intent, soft questions and answers and whether pressure in an inappropriate direction has been applied is for meetings to be recorded as had to be done with the Police decades ago.
      A recording IS the fly on the wall. What recording also proves however is it is totally impossible to tell/teach a client everything that they might need to know as bearing in mind many FOS staff do not have product specific qualifications, it’s unlikely a consumer would want us to spend the time teaching them everything that comes up in the CII Level4 diploma!

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