Judging by the amount of negative commentary on defined benefit pension transfers, you would have thought there would have been far more than 318 complaints about them to the Financial Ombudsman Service since the freedoms.
Yet that is the number the adjudicator revealed last week. It makes for reassuring reading that, despite the FCA striking a host of firms off and high-profile scheme failures, the majority of advisers are in fact trying to do the right thing; that number is both a tiny proportion of all transfers and of all pension complaints in general.
There is no excuse for complacency though, and there are myriad reasons why 318 looks artificially low.
For a start, it has only been three-and-a-half years since the freedoms, during which time those investing their new-found DB money have enjoyed a remarkable bull run in equity markets.
Recently, transfer values have remained stable enough that few clients can be envious that their peers got a radically better deal than them within months of the transfer.
And what of those firms involved in the big-name scandals that collapsed or were banned? Well, once a firm becomes insolvent, technically speaking, their complaints head to the Financial Services Compensation Scheme, so will not show up in the FOS data.
Besides, public knowledge of the FOS and FSCS is stubbornly low. If there has been bad advice, few clients would know whether they had received it, even if they did know who the right person to complain to was.
But again, none of this takes away from another remarkable positive in the FOS data: the uphold rate for DB transfer complaints has been just 33 per cent. Two-thirds are still going in advisers’ favour, and for complaints specifically around charges, that figure is even higher.
If you think of the firms that have got into hot water for transferring huge volumes of pensions with slapdash, shoehorned processes, chances are the complaints against them will be an easy win for the clients, who will all have received an identical poor service. This skews the numbers, so complaints against “regular” advisers doing DB transfers will have a lower chance of success.
With the FCA continuing to target based on volume and speed of transfer work, it is likely that more and more bad apples will be forced out, or those with expertise on the margins of transfer advice will consider the cost of doing the business just too high.
One month into the regulator’s new rules on transfer analysis and triage, the advice profession has shown it is still willing to go out of its way to ensure best practice with gatherings like last week’s Pension Debate III. For that, it should be applauded.
Justin Cash is editor of Money Marketing. Follow him on Twitter @Justin_Cash_1