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Nick Bamford: Why are we being judged by those less qualified than us?

Nick Bamford MM 700

I have just finished reading a brilliant book by neurosurgeon Henry Marsh called Do No Harm.

The senior managers of the Financial Ombudsman Service could do with reading it, in particular the part where Marsh tells of a case review managed by NHS personnel whose qualifications and technical knowledge were conspicuous by their absence. Can it really be right the performance of an experienced, competent and qualified surgeon is judged by those without such attributes?

While not usually about life and death, financial advice is highly complex. So it is only fair a client complaint that arrives in front of an adjudicator or ombudsman be dealt with by someone with equivalent experience and qualifications as us.

I am not the only one who thinks this. An adviser friend of mine recently wrote to the FOS asking for reassurance any complaint that might be sent to them would be dealt with by personnel as technically competent as he is.

He wrote: “I must (and do) hold advanced level pension qualifications before being able to offer advice in this complex area. I would therefore, as a minimum, expect anyone adjudicating on complaints in this area to be similarly qualified. How many (and what percentage) FOS staff involved in this area hold the CII AF3 or CII G60 pension qualifications (or equivalent)? And is AF3/G60 a minimum FOS qualification requirement for staff adjudicating in this complex area?”

These strike me as reasonable questions. After all, advisers have had to significantly up their qualification game, so presumably those who adjudicate complaints have had to do the same?

Here was the response: “While your role is to give financial advice, our adjudicators and ombudsmen do not give financial advice. Their role is to settle disputes between consumers and financial businesses. The technical, academic and professional experience of our adjudicators and ombudsmen are diverse. So we do not require our adjudicators and ombudsmen to hold specific qualifications.”

Wow. Leaving aside the blindingly obvious (and somewhat condescending) start to that response I think it tells us all we need to know about the FOS. It hangs onto a broad statement about diverse experience and technical knowledge but goes on to state: “We do not require new and current employees to record their qualifications on our HR systems and therefore are unable to provide you with the percentage of adjudicators and ombudsmen who hold the qualifications you mention.”

Imagine an adviser firm saying something like that to the FCA. We all know where that would lead.

Are my friend and I being unreasonable? Can it be that to judge on a complex defined benefit to defined contribution transfer complaint a lower qualification standard is acceptable? I accept both advisers and adjudicators or ombudsmen need to keep their knowledge up to date but surely the base starting level should be the same?

Marsh found himself being judged by managers and customer care staff in the NHS. I am not for one moment saying we are like brain surgeons but surely the FOS staff should be suitably qualified and fit for purpose?

Nick Bamford is executive chairman at Informed Choice


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. Well said Nick.

  2. Absolutely spot on.

    Back in 2008 I spent as day with the FOS, courtesy of an invite from Walter Merricks in response to an article I had penned questioning their ability to understand reality and also the way that different adjudicators reach different decisions for essentially the same complaint.

    Whilst I enjoyed the beef and cucumber sandwiches and fresh orange juice I would have additionally enjoyed meeting the adjudicators but I was kept well clear of that area.

    When I pointed out to a senior ombudsman that many decisions were plain wrong, she nodded and said yes, sometimes it happens!

    Given the uneven nature of the ombudsman rules where summary judgements up to £150,000 can be handed down with 8% interest tagged on and no right of appeal the very least we can ask for is that they are qualified and capable.

  3. Nick : You are so right.
    Some adjudicators come across as biased in favour of complainants, and as they clearly have no appropriate and relevent understanding of the pension technicalities they simply take the easy way out in order to obfiscate their obvious lack of knowledge and find in favour of the complainant and hope that the adviser pays up.
    I recently received a response from an adjudicator regarding a DB transfer where the adjudicator admitted that ‘I can’t find a table of critical yields that tell me what it should be, and that “I calculate that it should be 6.4%, and not 6.3%” as you have submitted’. I
    In reality, the fund into which the client invested actually achieved more than 7% pa, yet the adjudication still went in favour of the complainant. The calculation for loss, actually showed no loss whatsoever, and there was a surplus.
    There was no apparent attempt by the adjudicator to try and understand the client background, no apparent examination of the DB benefits structure, the value of CETV relative to the benefits, no understanding of the indexation, and revaluation factors and the nature of the guarantees of the ceding scheme, that are all vital parts of the CY analysis – and all because that adjudicator was placed in a powerful position to adjudicate on a matter that he did not understand, and in which he clearly had no relevant qualifications or experience.
    Unfortunately, given the arrogance of the FOS, it is now very like having your case brought before a judge with no legal experience whatsever: paper submission only – no personal attendance allowed, and no defence and no right of appeal outwith the FOS.
    And by the way, it seems to me that the complainant does have the right of appeal: even more signs of FOS bias in favour of consumers to the detriment of advisers.
    The cost to advisers of defending disingenuous, vexatious and meritless complaints made to the FOS is set to rise sharply with the recent and growing number of so called Claims Management Companies (CMCs) and Specialist legal firms, whose only interest is in earning big ‘no win, no cost’ fee using the media to encourage consumers to ‘make a complaint and get compensation’ for all and every investment ever made.
    These CMCs typically drive a horse and cart through the FCA’s and the FOS’ complaints management process that advisers have to follow (at great cost), and routinely disregard the advisers responses, and simply send everything to the FOS as some kind of ‘no cost complaints clearing house’. These CMCs therefore have no cost and take no risks, yet the advisers have to pay for it.
    Not unsurprisingly the CMC letters are typically highly generic, lack detail, and are not evidenced in fact. Many complainants are short on the truth and will simply say and do ‘whatever it takes’ to ‘get my compensation’.
    I really do wish that such complainants were forced to go to court and swear in front of a judge, and if that were the case, I am sure we would see a lot more fairness.
    These ‘complaints’ – vexatious or otherwise, in turn have an adverse effect on PI insurance costs and lead to more and more exclusions and excesses that may actually render the policy worthless.
    This in turn leads to adviser firms failing (particularly the smaller firms), and yet even more liability falls on the FSCS, thereby increasing the entire cost to advisers even more.
    the system is badly broken and i am sure that my brief experiences are not unique and i hope that MM and other advisers will take this topic to a higher level before it is too late.

  4. I worked at the Ombudsman Service between July 2005 and April 2008. In a pensions and investment team. Part of a wider pension department of about 40-50 adjudicators and a few ombudsmen. I joined with FPC 1, 2 and 3. Between April 2006 and December 2007 they fully supported, both financially and with time to study, my achievement of DipPFS, which required 5 exams. I had also started my study for AF3 when I left and I passed it that year.

    Not every adjudicator had my drive to study. So there were a number of individuals who were FPC qualified and there were a number without any financial services qualifications at all. Some of my colleagues were studying in other areas of relevance to dispute resolution, not necessarily advisory qualifications but still relevant to the skills required of the job.

    However, there were a significant number in the pensions team who had been advisers or compliance officers and who had CII/PFS Fellowship or similar. A significant enough number to act as a point of reference for others lacking those experiences or qualifications. Indeed this was encouraged and expected. Mentoring and case checking in my time there was sufficiently robust that I think it’s unlikely you’d see a material difference in the outcome of the same complaint dealt with by half a dozen adjudicators.

    Now I am not trying to argue that the FOS is without fault. What organisation is? In fact I think that there is a great deal wrong with a system that operates effectively outside of the law. However, of all the criticism that can be put at their door, qualification level of staff is among the least constructive.

    Simply put, the skills required of an adjudicator go beyond those gained through having the same qualifications as an adviser and, in my opinion, there would be no change to the handling, or outcome, of complaints if they were. Your levy might just go up a bit to pay for the cost of all the exams and the cost of having to pay the staff more to retain them.

  5. While very true, the flip side of the coin is the no doubt higher salaries that will become involved. Costs will need re-visiting somehow. Perhaps there is a case for differential FOS charges, based on complexity of the case….and dare one say it, some form of contribution from members of the public………..

  6. @Benjamin Fabi I was pleased to learn that whilst you were at the FOS you put in the effort to improve your professional qualifications. I was also pleased to learn that members of the pensions team included those who had CII/PFS Fellowship or similar.

    I do hope that is still the case today but find it odd/worrying that FOS cannot confirm that because they do not have the records to do so. Still “do as I say, not as I do” is probably part of the regulatory culture I guess.

    Where I believe you are wrong is that he skills and experience of an adviser in this area will be streets ahead of the skills needed by the adjudicator that you mention, as will the degree of personal and financial responsibility.

    I was dissapointed to learn that you don’t think that adjudicators getting better qualified might lead to materially different outcomes but not surprised to learn that.

    Perhaps if they did try (like you did) to improve their specialist qualifications in this area we might have a greater degree of confidence in them?

    Still, if Brain Surgeons can be judged by Client Relationship Managers in the NHS I guess Chartered Financial Planners shouldn’t bleat too much about being judged by poorly qualified FOS adjudicators should they?

    Perhaps some of us just hope for better

    • Thanks for replying Nick. I’m not quite following your third paragraph but apart from that I think we just have a different perspective on the same problem, being that the FOS isn’t entirely fit for purpose.

      The reason that I don’t think it would improve outcomes (based on my experience of when I was there, it might have changed) is because there is sufficient knowledge and experience in a team to overcome a lack of it with some individuals. Also, the Final Decision is always that of an Ombudsman, not an adjudicator. This is an option for both the firm and the consumer. An adjudicator is simply trying to informally resolve a complaint without the need for this level of formality.

      The FOS website has a published career history of every ombudman/woman. This gives a good insight into the level of their experience, although not explicitly outlining their qualifications.

      • Hi Benjamin what I am saying is that I believe that the skills needed by an adviser to deliver transfer advice to a consumer are greater than those required by an adjudicator/ombudsman to judge. But that the technical knowledge and qualfications of both needs to be equivalent.

  7. Whilst the FOS is intended as a free and ‘quick’ method for arbitrating on disputes the problems are manifold.

    a) It is not quick, I know of many cases stretching beyond 3 years
    b) It relies on subjectivity and hearsay.
    c) Liars who are found out can still have their complaint upheld
    d) FOS investigates the whole process not just the specific complaint and it is this that CMCs focus on
    e) Opportunists quickly realise that many firms will cave in at the threat of a FOS complaint and pay up rather than investigate and maybe argue
    f) I know of complainants who have been ‘coached’ by adjudicators into saying things that might have otherwise remained unsaid
    g) The lack of an independent appeal process renders it illegal in human rights terms

  8. Of course in principle you are perfectly correct and the expectation is perfectly reasonable.

    However in the real world highly qualified people usually command decent salaries. I presume that these adjudicators earn considerably less than a well qualified IFA. If this is true then you have your answer. If however they do earn equivalent amounts then your argument stands – although as you have seen – you may as well talk to the wall.

  9. Many Adjudicators are good, but the others should always be challenged.

  10. Could not agree more Nick.

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