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FOS hit with 300 pension transfer complaints since freedoms

The Financial Ombudsman Service has revealed it received 300 complaints relating to defined benefit to defined contribution pension transfers since 2015.

However, this currently makes up 2 per cent of all pension complaints between April 2015 and March 2018, when the FOS received a total of just under 15,000 complaints on pensions and 1,700 complaints about pension freedoms.

Around 30 per cent of complaints were upheld in each of the three years.

Although making up only 2 per cent of complaints, FOS describes pension transfers as a “major concern”. While FOS says it cannot fix the remedy this by providing tick-box compliance, it did say it takes the following into account in each pension transfer case:

  • if the adviser really “knows their customer” and all the relevant circumstances
  • if they understood what their customer was trying to achieve
  • if there were any other ways they could have helped their customer get what they want from retirement
The service provided a further breakdown of what transfer complaints were about:
Issue
Total Cases
Uphold rate
Advice not to transfer
29
20%
Charges for advice
16
11%
Decline to advise
5
20%
Delay in advice
119
44%
Investment loss due to delay
5
0%
Admin
73
29%
Suitability – general
47
38%
Suitability – UCIS/QROPS
24
33%
Total
318
33%
FOS chief ombudsman and chief executive Caroline Wayman says: “Most financial advisers I meet – and indeed most financial advisers – haven’t ever had a complaint. As long as advisers continue to treat their customers fairly, it’s likely to stay that way.
“As ever, the challenge for advisers isn’t just to know the rules, but to apply them to real lives – understanding where people are coming from, their hopes for the future, and what really matters to them. We’ll continue to share our insights from the complaints which we see.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. These figures would suggest six cases where FOS felt that a transfer should go ahead, and one case where the adviser had no right to decline to advise. The latter is of concern as recently a ruling confirmed that firms could operate as they see fit and not give advice to or transact with those that they did not wish to do business with.

    Reading between the lines it is possible that the advisers involved had not fully understood the client’s needs and objectives before recommending not to transfer, which would justify the FOS position.

    Without knowing the facts of the cases I would not like to judge, but if any of these were insistent clients these rulings would put us between a rock and a hard place. The positive news is that it is a small number to date, but I am sure that there are many out there being encouraged to follow suit.

  2. It would be interesting to know the bases on which the provision of advice was declined and on which the customer felt s/he had grounds to complain. Surely, no FA is obliged to provide advice to anyone and, should he smell trouble, he’s probably wise to decline.

    At this rate, we’ll start seeing complaints against advisers for refusing to facilitate a transaction on an insistent client basis. For the avoidance of any misunderstanding, it may be prudent to make absolutely clear in our IDD’s that we reserve the right, at our absolute discretion, to decline providing advice to any client and that we do not under any circumstances undertake business on an IC basis. What is the world coming to?

    • You should read Ombudsman News before passing judgement.

      The case you refer to was upheld because the client had a 3 month deadline and it took the adviser 2 1/2 months to tell the client they couldnt deal with the case.

      The client only had 2 weeks left and therefore lost the enhancement.

      • We need to get better a turning people away at the first and earliest opportunity when our instincts tell us so. Not easy when people are baying for their cash but needs must.

  3. This will be the tip of a very big iceberg once the markets drop significantly. (After Brexit?)

    • Ah, Harry, your post reminds me of the apocryphal headline in The Times – “Fog in Channel, Continent Cut Off”. The fortunes (or not) are affected by many more factors than just Brexit – US v China springs to mind!

      • True, but the main point of the post I think might hold true. If there is a significant drop in markets (for whatever reason) then I believe ‘freedom’ complaints will escalate exponentially.

        But I also still think that a poor Brexit will be a catastrophe.

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