I am sure we all read with amazement your report on April 15 that the Financial Ombudsman Scheme pays its staff a bonus as part of their remuneration package, and that many of the 600 adjudicators come from a financial services background and are, therefore, used to the idea of targets.
It would be of interest to all of us to know the content and structure of the bonus system and whether the payment will be for cases completed or the amount of assessed awards.
Was this not the downfall of our industry? Was it not the introduction of “targets” and “overriders” with enhanced commission – sorry, “remuneration” – that put us on the slippery slope to the current regulation regime?
Should we take any comfort from the fact that many of the adjudicators come from a “financial services” background? After 35 years as an IFA, I have come to realise this generally indicates the person was unsuccessful in the financial services industry, normally for a number of reasons. One of which could have been “misselling”, unknowingly encouraged by their employer's enhanced remuneration package for attaining targets. Most direct sales insurance companies and organisations had an “elite” club of top performers earning large bonuses.
Those of us who have experienced an adjudicator finding in favour of a claimant when they know it is a “try on” rarely have a chance of the ombudsman reversing the decision. The claimant does not have to produce any evidence to back up their “missale” claim. Practically all life offices cannot produce the original illustration document, most claims are made against policies taken out more than six years ago where the files are no longer retained. The FOS also does not accept that the current ongoing stock market turbulence is responsible for a drop in investment returns.
We must not overlook the fact that many claimants are not even half-way through the term of their contracts.
These points, and the fact many life offices decide it is cheaper to “pay” than dispute, are the ideal set of circumstances for a person to be tempted into the “bonus” option.
Mick McAteer of the Consumers' Association was quite right in his comments. It is without doubt a backward step. Alison Hoyland, the FOS spokeswomen, is no doubt being politically correct in her response. As an industry we must ask the FOS to withdraw this remuneration package. History has proven the difficulties in monitoring this concept, and management are the first to try to conceal any problems that occur. We as an industry know this better than most.
Heather Moor & Edgecomb