In September 2015, the Financial Ombudsman Service and The Pensions Ombudsman set about drawing up a new Memorandum of Understanding between the two complaints adjudicators.
While journalistic technique suggests I should have written a ‘grabbier’ introduction to this piece, that’s actually really important.
The effective resolution of pensions complaints, particularly over Sipps, is critical to a functioning post-freedoms market that consumers have the confidence to access.
It’s especially important to avoid the huge costs and time delays involved in complainants being passed from pillar to post as they have been on a number of occasions since the freedoms.
Back in July 2014, FOS and POS got in quite a tangle over one of the largest Sipp failures to date: Berkeley Burke. FOS upheld a complaint against the Sipp firm for failing its due diligence on Sustainable AgroEnergy, an unregulated biofuel investment.
Berkeley Burke took legal action, noting how the decision seemed to clash with similar Pensions Ombudsman rulings two years previously that absolved claims targeting Berkeley Burke and Hornbuckle Mitchell.
The MoU would clarify how information is passed between the authorities, and where each one’s jurisdiction ended so similar situations would be less likely to arise again.
Loosely, FOS take care of most pension complaints, including suitability or advice, but standardly refer administration complaints on to POS, with the potential for overlap and complaints to fall into both jurisdictions.
Nearly two years later, are we any closer on a blueprint that would clarify who is right and who is wrong, or who even has responsibility for a particular complaint?
The short answer is probably not. When, this week, I checked in with POS for maybe the fifth or sifth time since talks started for a progress update, I was politely informed that the answer remains the same: “Discussions on our Memorandum of Understanding with FOS are still ongoing.”
This is despite the fact that a FOS spokesman said, on maybe my third check-in last October, that FOS and POS have “a good working relationship given the crossover of cases.”
The path forward
The time is now to draw up this dull but important document.
I also caught up with Financial Services Compensation Scheme boss Mark Neale last week, and the gist of his remarks was that he can’t be sure whether the Sipp complaint and compensation wave has peaked yet.
FOS certainly don’t seem to think it has subsided yet. And, who knows, quirky complaints over defined benefit pension transfers that straddle administration and advice may test the relationship between FOS and POS again in the not too distant future.
In other spheres of regulation, collaboration has certainly improved. Take the Financial Advice Market Review as an example: The FCA were to work with the Treasury on a number of the recommendations, and the FOS would reach out to the industry more through roundtables.
The FCA and FOS have had an MoU for how they work together since December 2015.
As former FCA bod Rory Percival pointed out, the refrain from the FOS at our recent Money Marketing Interactive conference that the more you can do to personalise the documentation, the better placed you are to defend a complaint, is one that the FCA too has been keen to express on numerous occasions.
So why does it take a year and nine months to decide on who does what when it comes to pensions complaints?
I’m sure there’s a good, reasonable answer as to why. Pensions are notoriously complex, that much we know. But it also doesn’t seem beyond the wits of some pretty smart and experienced brains in the complaints adjudication business to at least draw up a few examples of where one or the other would take up a case.
Resolving this omission post-haste would be a win-win for consumers and pensions companies at a time when huge reform is understandable elusive.
Justin Cash is news editor at Money Marketing. You can follow him on Twitter @Justin_Cash_1