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.”