View more on these topics

FOS principal reveals keys to defending complaints

The Financial Ombudsman Service has reiterated its advice to IFAs to make suitability reports as tailored and personalised to the client as possible.

Speaking at our Money Marketing Interactive conference today, FOS principal ombudsman Richard Thompson outlined how advisers can best mount a defence at the FOS when faced with a complaint.

Thompson said: “The more you can do to personalise and tailor that documentation, that suitability report around the customer and their circumstances, the better placed you will be to defend in the event that someone does wish to bring a complaint.”

While he said that “standard documentation always has its place” to help clarity or understanding for consumers, it had its “limitations” as well.

Thompson added that using the client’s own words in documentation was the “gold standard” when it came to best practice.

He said: “It helps when we can see things in the advisers own words…The gold standard is the clients own words from what they understood then.”

Thompson went on to give a number of “warning signs” for the ombudsman, including where there is a “clear disconnect between the recommendation and the documentation that supports that”.

He also urged advisers to steer clear of jargon-heavy product information.

Recommended

4

The future of the FOS: Has it turned a corner with advisers?

Advisers have welcomed the Financial Ombudsman Service’s attempts to engage with them more as it tries to get a firmer grip on costs and efficiencies. In its latest business plan and budget, published last month, the FOS said it would cut nearly £32m from proposed spending, as staff costs in particular would be squeezed. Industry […]

FCA logo glass 2 620x430
6

FCA cleared over decision not to intervene in FOS ruling

The FCA has been absolved by the Complaints Commissioner after allegations it failed to act on a poor decision from the Financial Ombudsman Service. A complainant argued that the FOS and its independent assessor had mistreated their case, and argued to the FCA that it had failed in its oversight of the adjudicator. The FCA […]

FCA-Building-Blue-Sky-700x450.jpg
22

FCA to spend £60m fitting out new offices

Move to Stratford to cost regulator £60m in fit out costs The FCA is to spend £60m fitting out its new offices in Stratford. Board minutes released by the regulator say the FCA plans to start moving to its new offices in East London in May 2018 and out of its current Canary Wharf premises. […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

  1. So when you write, you said at our meeting *I understand the reason for investing in the Emerging Markets fund from XYZ and the risk involved and am quite happy with that”. In 5 years time when it has tanked the same Client says ” I did not realise it was such a high risk and would never have got involved if I had”.
    Who wins?

    • Keith, if that’s the case, I’d imagine the adviser should be able to document the exact reason why the client is happy to invest in such a fund and in their own words… e.g. “client says, ‘I’ve been following this fund manager from XYZ for some time and done my own research into the fund and the sector, and am confident this area has good potential growth’ “. But the flipside is, the client has come to you for advice (otherwise they would’ve DIY’d), so you should be advising the client to use a diversified portfolio of assets but you’d could include that Emerging market fund into the portfolio to cater for their preference if it matches their risk profile. Of course, if the client insists 100% allocation into such a risky fund or some odd solution against your advice, this would be an insistent client case.

  2. So how did Hargreaves Lansdown get away with transferring DB schemes with no advice for years then? Lets ask Tom McPhail that question!

  3. How about documenting a discussion with the prospective client, where you ask them to comment on whether they understand the recommended product sufficiently for them to undertake not to refer the matter to the FOS, if the investment tanks!

  4. Thompson said: “The more you can do to personalise and tailor that documentation, that suitability report around the customer and their circumstances, the better placed you will be to defend in the event that someone does wish to bring a complaint.”

    Better placed does not equate to being in a good position or in an excellent position.

    The FOS saying the same as the FCA is somewhat facile. What matters is what they do in practice.

Leave a comment