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FOS says split-cap complaints to hit 2,000 by March

Complaints about split-capital investment trusts are expected to rocket to 2,000 by March from zero a year ago, says the Financial Ombudsman Service.

The estimate is part of the FOS&#39s annual plan and budget, published last week, in which it predicts a further 3,000 complaints about the product in the 12 months from March 2003 as the scale of the problems become clear.

Endowment policies linked to mortgages are still the biggest grievance although the number of complaints dropped to 10,500 from 14,595. But the FOS says as life companies issue new batches of reprojection letters, it expects the figure to jump to 16,000 next year.

Investment complaints are increasing across the board which the ombudsman says could be as much a result of poor returns in the current bear market as misselling or other problems with products or firms.

Complaints about singlepremium investment bonds are set to total 1,700 by March, up from 362 in the year from March 2001 and other miscellaneous investment products will generate 6,800 complaints, up from 4,062.

The FOS estimates it will get 55,000 complaints in total this year from 43,330 in the previous 12 months.

As a result of the higher number of complaints generating more in case fees, the annual levy that firms pay to the FOS will drop by an average of 24 per cent for March 2003/04. This means an IFA firm with three RIs will pay £75 rather than £117.

FOS head of communications David Cresswell says: “The general increase in investment complaints is to be expected in light of the stockmarket performance over the past three years which exposes misselling that might otherwise not be uncovered. Not all the complaints will be upheld.”

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