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FOS chief exec: Good advisers have nothing to fear

Caroline Wayman FOS

Good advisers have nothing to fear from the Financial Ombudsman Service, says chief executive Caroline Wayman.

Speaking to Money Marketing, Wayman says the view that advisers should be worried about the FOS is the biggest myth about the organisation she hears from advisers.

She says: “Of course we see a whole range of advice from different firms, but if you’ve given good advice you have nothing to fear from the ombudsman. I want to understand where those concerns come from and highlight examples of good practice.

“We are human beings and I would urge advisers to come and talk to us if they have concerns.”

One area where the industry has been fearful of the FOS’ approach is insistent clients. Whether or not advisers should transact requests that go against their recommendations has divided the industry in recent months.

After repeated calls for regulatory clarity, the FCA published a factsheet on insistent clients in June.

Asked whether there is a need for further clarity from the FOS, Wayman says: “I thought the FCA’s factsheet was clear and would urge people to read that first.

“There aren’t special rules about insistent clients, and the more you think there is a special box of guidance for that, that may add to the concern rather than help.

“The FCA has done a good job of saying here’s some principles and that is their role – we are not the regulator.

“I don’t have any additional wisdom. As long as the advice is suitable, the customer is treated fairly, the information is clear and records are kept even if there is no transaction, you won’t go wrong with us.”

But Wayman says the FOS is open to sharing its work and may publish some case studies on insistent clients in future.

Another area where some have expressed concerned about the FOS’ approach is suitability letters.

In November, the FCA said suitability letters are too focused on defending potential complaints and not enough on client engagement. But advisers argued they have to include certain information to defend any potential complaints to the FOS.

Wayman says: “We definitely agree with the FCA that suitability letters should be written for the consumer first. The main objective is to set out clearly, in ways the consumer can understand, what the recommendations are. Adding more and more information is likely to move you further away from that objective.

“People often crave an absolute rule such as ‘four pages is good’, but as ever it is what is fit for the circumstances.

“If you start with doing right by the customer, giving good advice and setting it out clearly, you have very little reason to think that anybody is going to come along later and say that was wrong.

“Certainly I wouldn’t want people to be thinking ‘I need to throw that in, because the ombudsman might think x or y’.”


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There are 21 comments at the moment, we would love to hear your opinion too.

  1. Dominic Thomas 10th July 2015 at 1:23 pm

    Could I make a suggestion? how about Caroline redacting the names of advisers/client and firm and publishing a couple of examples of disputes on each “product area” so that we can all see whether the decisions are reasonable, what the supporting “evidence” or documentation was and what the client alledged. Surely that would be the most straight-forward way to provide reassurance to good advisers… who by the way cough up with FSCS fees to pay for those that aren’t or were deemed “wanting”.

  2. Nick Pilkington 10th July 2015 at 1:24 pm

    Unfortunately this is the same advice we always get. i.e we won’t tell you what you should do but we will judge whether or not it is correct, with the benefit of hindsight, 5 years down the line.

  3. I think this is good news and supports what many of us have been saying. The consumer comes first and no-one needs to worry about FCA or FOS if they are genuinely giving good advice. I hear constantly that it isn’t advice that is the issue but the documentation- I can honestly say I don’t believe this- good advice is clear and obvious and it is lazy advice that causes the problems in the main. I haven’t always agreed with FOS decisions when they take hindsight views on mass issues (mortgage endowments would be one good example) but given what we all now know we can all give great advice and shouldn’t have anything to fear.

    • Jane… this fine up to a point ! but fear should not always be defined by ones actions, those who constantly flout the rules or give poor advice do not fear the FCA or FOS anyway thats why they do it !

      Now we do have everything to fear by the actions of others, advisers, FOS and FCA, we as good responsible advisers, have to pay the bills created by the bad and corrupt, we have to suffer the increased costs of regulation and the regulators, also we have to deal with increased scrutiny, harder tougher regulation the list I’m afraid is endless………

      If you are not afraid as as good responsible adviser……. you should be !!

      Poor outcomes are not exclusive to those giving advice ? just think on that for a few moments !

  4. Good advisers have much to fear from hindsight in the face of whatever has gone wrong in the future. That could be a bond collapse, residential property and mortgage implosion, shares falling, currency collapse/rocketing, under-performance compared to a selected comparative (cash or another fund), rule change personal impact… whatever big risk for which the client is unprepared and lovely clients (or their offspring or distant inheriting relatives or other professional representatives) lodging a complaint against losses.

    It would allege inappropriate investments for them in their circumstances, too high a risk propensity (the adviser doing something or failing to do something), inadequate advice on the prospective risks or a failure to note what else could have gone wrong and which did, too sophisticated for the client or whatever.

    It could come from a new form of Claims Management Company which is deft at manipulating information into an eligible complaint.

    And the Chief Executive of the FOS cannot see this? Sadly, some of the evidence is there already in the guise of judgements the FOS has made already and despite the tremendous ongoing professionalism of the advisory marketplace.

    The market reality for all firms is to make sure they price-into their model the inevitability of complaints, however hard you work and professional your standards (and yes, there are still chasms in the latter in some firms/sectors). It is an inevitability and you must price for it and provide for it in your finances, however unjust that inequitable judgement could be when it comes.

    • I agree with Philip Milton although Catharine Weyman’s words are positive and taken as such by Jane Hodges. The Cirencester Friendly Society is a case in point as is the censorship of comments made by advisers after the case on FTAdviser and I look forwarded to finding out from my FOI request whether it was the FOS who censored the critical comments and if so under what justification does the FOS censor free speech?
      The FCA have tried to censor comments I made on NMA before, but the editor called me first to ask whether I would retract or stand by my comments and as they were factually correct (if pointed) I said I would and the FCA backed off.

  5. The Insistent Clients issue can easily be resolved by COWS. The FCA/FOS just need to issue a RULE that says for an insistent client service to work THE CLIENT must write to the IFA with the logic / reasons. Clients Own WordS (COWS). Job done, clear, no ambiguity, no chance the Client hasn’t read the IFA form he signed, etc etc.

    • In writing may not be there own words, best way is for them to say in their own words what they are insisting on happening and the adviser records it verbatim as a sound recording. We would only do work for existing insistent clients on this basis as an insistent non client should be able to go direct to a provider as we don’t want to deal with people who ignore our advice the first time we deal with them.

  6. The issue is about legality – which the FSA rules purport to be – and ‘balance of probability, which the FOS tells us is how best to resolve disputes.

    The two occasionally coincide but very often they conflict and then the adviser is at the mercy of barely competent and frequently temporary adjudicators.

  7. These are nice words in theory. However, we only have to look at the two fraudulent complaints by Christopher Parkin that FOS upheld and the High Court recently overturned to realise that the idea firms have nothing to fear from FOS is not true.

    • In case people don’t know that is the Cirencester case.

      • forgot to say, the judge said the claim viathe FOS was fraudulent and that was why it was overturned and yet several months on we have heard nothing from the CPS about prosecutions of anyone involved in the case. Why? This IS in the public interest I would have thought…. 22k advisers interest!

  8. the biggest fear of all is the naivety with which these all powerful regulators show when casually making these throw away “you have nothing to fear” comments.

  9. peter mulholland 11th July 2015 at 6:02 am

    I lost my case on the basis that a first time buyer should be classified as a cautious investor and I categorised the client profile as medium risk. Funny that -so people have to wait until what point to be investors according to FOS? I have not seen it printed anywhere that a first time buyer (in this case age 25) should be classified as cautious. In fact it could easily be argued they should be adventurous having more time.

    But then this was a case brought by a complaints firm and FOS needs to feed the provider.

    Being an ex network member i wasn’t even asked my opinion and after querying my account my network later told me by email it was not my business. Mmm non of my business but I underwrote the claim since they just deducted the costs ‘fines’ from my account.

    Its a nasty pit of snakes really isn’t it haha.

  10. The compensation culture in general in the UK is predicated on the view that everyone else is to blame apart from the customer. Personal responsibility, common sense and caveat emptor are dead and regulations exist to protect the public from their own stupidity. Witness the multitude of inane risk and health and safety warnings that we face daily in life, “take care the coffee is hot, other search engines are available,” (courtesy of the BBC). In this context and bad past experience advisers have plenty to worry about.

  11. @Michael Grant – I agree.

    The most inane I have seen is a warning that small parts represent a choking hazard. This is on a Tesco own brand Frisbee!

    Can anybody do better?

  12. Good advisers have to fear poor FOS adjudicators

  13. As a business we are now taking a stand that if we have a complaint which is clearly fictitious and FOS agree, the case will be passed to our solicitors and local police for legal proceedings

  14. Steven Farrall 11th July 2015 at 7:41 pm

    Oh Ho Ho. I take it she’s being ironic. The FOS is arbitrary. It’s just part of the same social engineering agenda as the FCA. It is not the ‘rule of law’. It is the rule by capricious bureaucrats.

  15. Mike Hunt ~ quite agree. BTW, how are your brother Isaac and his wife Carey these days?

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