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IFAs busting for apology from FSA in figure furore

Advisers have called on the FSA to apologise for its manipulation of Financial Ombudsman Service complaint statistics to try to dispel IFAs’ claims that they provide a better service than banks.

The FSA’s first RDR newsletter published last week says advisers should not use the fact they are only responsible for 2 per cent of all FOS claims as evidence for why the RDR must be focused on banks and not IFAs.

In a section entitled, Myth Busting, the FSA says instead of looking at all FOS complaints, advisers should focus on data generated from products and services provided both by banks and IFAs, such as investments and pensions.

The FSA says 14 per cent of new cases, or 22,278 out of 163,012 referred to the FOS in 2009/10 relate to products provided by both banks and IFAs. Of this number, 50 per cent were upheld.

The regulator says IFAs accounted for 12 per cent of investment-related complaints compared with 29 per cent for banks. On pensions, IFAs accounted for 28 per cent of complaints and the banks 10 per cent.

The newsletter fails to give a breakdown of how many complaints were upheld against banks and IFAs.

The FOS annual review for 2009/10 says 52 per cent of bank claims were upheld compared with 39 per cent of complaints about IFAs.

When the newsletter was published, Money Marketing looked at total individual pension premiums paid for 2009 which showed that banks had only a 5.6 per cent share of the £12.7bn market while IFAs had a 75 per cent market share.

The FSA failed to give any indication of market share in the newsletter.

Adviser Alliance founder Alan Lakey says the regulator is trying to frame the debate over the RDR. He says: “It is propaganda, the FSA is being very clever. It knows that information it provides will be picked up by the national press and if it can get figures like these into common usage then it almost becomes fact. I would like to hear an apology from the regulator.”

Ashley Law director Jock Cassidy says not including the volume of business undermines the credibility of the statistics.

He says: “The volume of business should be taken into consideration if you are trying to get meaningful statistics. Anyone can make whatever sort of ammunition they want from statistics.”

Aifa director general Stephen Gay said he was “disappointed” by the use of the statistics, which could undermine a well deserved, good reputation among IFAs. He says: “It is important the FSA should offer analysis of relative risks but I would hope to see more constructive commentary in the future.”

Facts and Figures managing director Simon Webster says: “The use of selective statistics to defend the indefensible is evidence of the FSA’s desperation to prop up the rationale for the RDR.”

An FSA spokeswoman says the figures were supplied for “context”. She says: “The article points out that its main focus is to debunk the myth that because only 2 per cent of FOS complaints are attributed to IFAs, the RDR should be focused solely on improving the standards in banks.

“The other figures were supplied for context, and as we all know, complaints figures are merely one indicator of the quality of advice or service, not an absolute marker.”

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Comments

There are 30 comments at the moment, we would love to hear your opinion too.

  1. There lies, damn lies and statistics.

    Funny how the FSA is happy to use statistics when it suits them but then say that they should only be used as one indicator of service when it doesn’t back up their arguments.

  2. the FSA is proving that it is out of control, this is getting VERY serious!!
    What other “facts” have the FSA made up?

  3. Why don’t we all just stop paying our fees?

    Revolution brothers …….and sisters.

  4. We all know the FSA are a dishonest crowd of Imbeciles, who make it up as they go along.
    Suggest all IFA’s and IFA organisations pull together and refuse to pay anymore fees FSCS Levies or Fos awards untill this shower start acting within the sprit of the law, even if they are exempt from it presently.!
    Look what is happening in the Arab world, they are sick of dictators, time to mobilise IFA’s and our client TEAM. (Together Everyone Achieves More)

  5. Is it any wonder the “open & transparent” regulator has so little respect from those it seeks to regulate?

  6. The FSA played the regulatory fiddle will Britain financially burnt. Not only do they need to apologise to IFA’s but the whole country. However I think it more likely that they will pursue the Nero option and like his persecution of the Christians step up their hammering of IFA’s. The IFA’s are always a good scapegoat when the FSA want to justify their existence.

  7. No big surprise here.

    The FSA live on another planet as far as I am concerned.

    Would be nice to see a truly felt apology for all the failures they have made and some method by which they pay for their own mistakes like they expect the rest of us to do.

    Sadly I think I will need to live on another planet for that to happen but how anyone in a so called “fair” society staggers me and from a Government that promised us fairness, responsibility and justice, except for them and the FSA it seems.

    We should get a refund of our fees at the every least for a failed service.

    The only positive I can say is that in the last year they do seem to have got better at spotting problems a little earlier and taking action, but the system of regulation is still flawed and I can’t see that changing under FCA etc.

  8. Annon 8.31
    There are but these are just lies.
    From a corrupt and unaccountable organisation.

  9. ‘The FSA is being clever’ and I quote, to use figures that are easily obtained and use them in a biased way is pretty stupid no change then!

  10. 90% of statistics are made up………including this one!!!!

  11. This is the generic libelling of the IFA sector. Sadly that’s not actionable.

    The FSA staff member should be sacked – he will probably find a very well paid job at a bank in the very near future

    Note that the FSA is happy with this approach and then through its successor wants to be able to publish the findings of investigations before due process is completed. No doubt they will hide behind their absolute priviledge.and be able to libel particular companies without allowing them recourse

    G

  12. The FSA needs to realise that they are responsible for this type of ‘misinformation’ as being seen as ‘credible’.
    Who is running the show?
    Its about time they were held responsible for this type of deliberate slant away from the truth.

  13. I suggest another chat with our MPs about this! And also, are there comments from the consumer organisations about this? Or are they quietly consentrating on comparing washing machines?

  14. I have dealt with complaints for IFA’s and some of the advice I have seen is shocking.

    More importantly, the number of complaints which are dealt with and not recorded as complaints by IFA’s will be far higher than banks whose internal systems pick these up. I have seen numerous examples of clear cut complaints where the IFA pacifies the client, or buys them off but does not record it as a complaint.

    Stop swiping at RDR and prove your professionalism by taking a few exams.

  15. To precis the FSA’s response: “We don’t care abuot what you say or what is accurate – because we don’t have to”

  16. Once again it is the Adviser Alliance holding the flag while others cower under the burden of the truth.

    If mine workers had mobile phones they may have won their strike. The fuel protesters had mobile phones and brought the country to a standstill within two weeks. Tunisia’s and Egypt were the first successful revolutions, made possible because of the internet and as we speak the Arab world uses the internet to demonstrates for the freedom that many of use are willing to hand over to an elected dictatorship and regulator. The internet (not AIFA) has brought RDR to the floor of the House of Commons. The internet is not owned by anyone and is your voice and your ability to stop the establishment misrepresenting your views – so use it.

  17. Mr Smith is Head of Investment policy at the FSA.Under his name the FSA has deliberately published a set of figures to support their own argument, without making any effort to ensure that the result is clear, fair, and not misleading.

    The outcome is, of course, entirely the opposite. However those affected (i.e. IFAs) have no right of recourse against the FSA. Not even, it would seem, even the courtesy of an apology (or in FSA – speak “clarification”).

    In the last month or so the FSA has published guidance on investment product financial promotions, and their intention to aggressively investigate product design. How confident should any IFA feel about the FSA’s technical ability and ethical stance over such issues if they are willing to allow such blatent propaganda to be published?

    Any regulated firm with a budget of £500 million would be ripped to shreds by the FSA for failing to implement sufficiently rigorous systems and controls to prevent this from happening. There would be serious question marks against the honesty and integrity of senior management for allowing this type of manipulation to take place.

    Last year Mr Sants asked if the FSA should regulate the ethics of the firms it supervises. Perhaps it should concentrate in the first instance on regulating the ethics of its own senior management?

    (Originally posted on 10th Feb)

  18. This is like saying most people who die do so in bed, that make bed a very dangerous place to be.

  19. And the response from the FSA is…………..?

  20. A Nony Mouse, THIS IS NOT ABOUT EXAMS, IT IS ABOUT THE FSA BENDING THE TRUTH. how about revealing who you are??? plonker

  21. If all networks & IFAs decided not to pay, what could the FSA do? It would draw attention to our grievences by the media which is what we need.

    On Money Box BBC, the discussed briefly that IFAs would leave the market but that no matter, ordinary people could use the internet to find information and make decisions.

    What they fail to realise is the people don’t know what they need, they need to have contact with someone that can advise. Often this is when buying a house or receiving an inheritence when a thourough fact find is carried out and recommendations made. Often this is the first contact and when long term financial adviser / client relationships are forged. Financial products from cover to investments have to be sold as people do not naturally decide to remove spending power from their budgets. Really the only contact they will have is when they visit the banks to transact day to day business and will as usual be ‘missold’ financial products.

    Financial advisers unite, NOW, before it is too lake P.S. refuse to pay to AIFA too until they actually represent us!

  22. Anyone who imagines for one minute that the FSA will apologise for the misleading use of statistics is living in cloud cuckoo land. These are self-important civil servants who think they have the right to rule ordinary, hard working mortals’ lives, without ever having to admit to mistakes or wrongdoing.

  23. come on brothers unite.

    up the Alamo!!!

  24. TCF….shame the FSA don’t practice what they preach when it comes to their own clients. Using transparent information in an unbiased way…..or using one-sided information in a misleading way? I wonder how the FSA would react if I started making recommendations using their method of presentation…….

  25. I really do agree that A Nony Mouse should be brave enough to reveal who they are, if making such incendiary and unsubstantiated comments.

    And I’m sure we all trust bank’s internal systems don’t we?

  26. Well my firm was accused of “stifling” complaints as we didn’t get the number they would expect!

  27. I firmly believe that A Nony Mouse is a paid employee of the FSA.

  28. What do you expect from an organisation that used a 15 yr old little known south african report on its ifs’a to justify going to war on our industry with RDR !

    HANG ON A MINUTE Tony Blair isn’t in charge of the FSA is he ?

  29. A Nony Mouse is probably like me, works in the industry and would rather remain anonymous than have his or her views attributed to their company, it’s not through cowardice that we don’t reveal our names (and the irony of an anonymous poster criticising A Nony Mouse above is probably lost on many).

    Personally I agree with A Nony Mouse, I see shocking advice from IFAs every day. You can manipulate the figures all you want and so can the FSA, but the bottom line remains that if you are supposed professional, knowledgeable advisors then you should be ashamed of the level of complaints against you. Crowing over the banks being worse than you in some areas isn’t something to celebrate.

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